Standing Committee H

[Mr. Roger Gale in the Chair]

Higher Education Bill

Clause 23 - Condition that may be required to be imposed by English funding bodies

Amendment proposed [24 February]: No. 82, in 
clause 23, page 9, line 7, leave out paragraph (a).—[Mrs. Anne Campbell.]
 Question again proposed, That the amendment be made.

Roger Gale: I remind the Committee that with this we are discussing the following amendments: No. 3, in
clause 23, page 9, line 10, leave out 'the higher amount' and insert 
 '£3,000, increased annually on 1st April, in line with the Retail Price Index'.
 No. 144, in 
clause 23, page 9, line 11, at end insert 
 'but which can increase by a minimum of 0.5 per cent. above the rate of the retail price index in each academic year.'. 
No. 223, in 
clause 23, page 9, line 11, at end insert 
 'and that at least 10 per cent. of its fee income is supplied for distribution amongst institutions, as directed by the Secretary of State'.
 No. 239, in 
clause 23, page 9, line 11, at end insert 
 'and that there is provision to students, as directed by the Secretary of State, of a bursary equivalent to at least 10 per cent. of the fee, or £300, whichever is the greater sum'.
 No. 83, in 
clause 23, page 9, line 13, leave out from 'period' to 'institution' in line 15.
 No. 84, in 
clause 23, page 9, line 26, leave out paragraph (a).
 No. 85, in 
clause 23, page 10, leave out lines 30 and 31.
 No. 120, in 
clause 23, page 10, line 30, leave out from 'means' to end of line 31 and insert 
 '£3,000, increased annually on 1st April in line with the Retail Price Index'.
 No. 110, in 
clause 23, page 10, line 35, at end insert 
 'but excludes any year of education beyond the first three years of a course in medicine, veterinary medicine or education'.
 No. 86, in 
clause 24, page 10, line 44, leave out 'and the higher amount'.
 No. 87, in 
clause 24, page 10, line 48, leave out 'and the higher amount'.
 No. 88, in 
clause 24, page 11, line 1, leave out 'either of those amounts' and insert 'that amount'.
 No. 89, in 
clause 26, page 11, line 26, leave out paragraph (a).
 No. 225, in 
clause 26, page 11, line 30, at end insert 
 'and that at least 10 per cent. of its fee income is supplied for distribution amongst institutions as directed by the Secretary of State.'.
 No. 240, in 
clause 26, page 11, line 30, at end insert 
 'and that there is provision to students, as directed by the Secretary of State, of a bursary equivalent to at least 10 per cent. of the fee, or £300, whichever is the greater sum'.
 No. 252, in 
clause 26, page 11, line 30, at end insert 
 'but which can increase by a minimum of 0.5 per cent. above the rate of the retail price index in each academic year.'.
 No. 90, in 
clause 26, page 11, line 32, leave out from 'period' to 'institution' in line 34.
 No. 91, in 
clause 26, page 12, leave out lines 33 and 34.
 No. 121, in 
clause 26, page 12, line 33, leave out from 'means' to end of line 34 and insert 
 '£3,000, increased annually on 1st April in line with the Retail Price Index'.
 No. 92, in 
clause 31, page 14, line 5, leave out subsection (1).
 No. 93, in 
clause 31, page 14, line 10, leave out 'also'.
 No. 94, in 
clause 31, page 14, leave out lines 39 to 43.
 No. 95, in 
clause 35, page 16, line 4, leave out '(a) or'.
 No. 96, in 
clause 36, page 16, line 23, leave out '(a) or'.
 I have been given notice of a desire for a Division on amendment No. 110. Traditionally, the Chair does not call grouped amendments, but I have agreed to call amendment No. 110 in addition to that moved by the hon. Member for Cambridge (Mrs. Campbell). If anybody wishes to press any others to a Division, they must give notice and only then will I exercise a judgment.

George Mudie: I was taken by surprise by the time extension this morning. I continue almost in the middle of my sentence making the point that clause 23 is an important part of the Bill. To my understanding it is the element that divided the House: about 49.5 per cent. of the House voted against and 50.5 per cent. voted for. However, that is not reflective of the numerical membership of the Committee. There is a danger that we may not get the Bill through.
 That close vote, triggered by the issue of variability, was supported by people such as my hon. Friend the Member for Cambridge, who has highlighted great doubts about variability and involving the market in higher education. She is a nice, pleasant individual who is aware of the traditions of not killing a Bill on Second Reading. She, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), I and others worked hard in negotiations to make the Bill more acceptable and were granted important concessions. We were prepared, because the negotiations continued until the last moment, to vote for the Bill on Second Reading on the understanding—I am a naive Scottish Yorkshireman so I am sure that this is accepted by the Committee—that there would be an open-minded discussion in Committee and that we would seek to mend fences. 
 I was making the point that putting me on the Committee was a disservice because more eloquent hon. Members with knowledge of education would have been able to speak to the Minister in greater detail and might have brought peace. I do not think that that is helpful—and it is no laughing matter. The futures of a lot of youngsters are at stake. If we are so tightly divided in the House that a Government with a majority of 161 can only win by five votes, there must be common sense that we do not want to return to Report or Third Reading unless we have moved closer together. 
 I support amendment No. 82 and wish to comment on amendment No. 3, because they both deal with important issues. I am glad that the break gave hon. Members some chance to forget the excellent contribution that was made before it—so that my contribution does not pale in comparison—but I cannot fault it in spirit, sympathy and objectives, even though it was made by a political opponent, the hon. Member for Harrogate and Knaresborough (Mr. Willis). I wish that I had made it. If I had made as good a contribution—and I am certainly not going to—and got such a reception, I would think that there was no hope for the Bill. If that contribution is ignored, sneered at and paid no attention to, we will clearly make no movement on variability. The decision has clearly been taken to introduce a market in education, and the traumatic time that Labour Members went through—I do not know about the Opposition—will be rerun. That is not something that I view with pleasure, in either an individual or, above all, a party sense. 
 I hope that the points of my hon. Friend the Member for Cambridge will be responded to not just in words or argument, as the argument will then continue elsewhere. I point out that the majority was five. One Member did not vote because his wife was ill that day, so I would consider the majority to be four. A number of hon. Members voted for Second Reading on the basis that there would be further serious discussions.

Graham Allen: I am sure that my hon. Friend is expounding his views, which I respect, on sound policy grounds. Does he
 concede that there may be a political party represented in the Committee that would vote with anyone who gave it the possibility of embarrassing the Government? Were there, for example, to be a difficulty about not including variability, would that political party have sided with those in my hon. Friend's position purely to embarrass—

Roger Gale: Order. That fascinating speculation has nothing to do with the amendment.

George Mudie: I think that it is a matter of record that both parties have been in the same Lobby this week. I seem to remember being in the same Lobby. I was not alone for a change. There were more than 71 of my colleagues with me. In fact, I looked around and saw a few familiar faces. There is no use in speculating as to why others were in the same Lobby.

Roger Gale: Order. Not only is there no use in speculating; it is not in order.

George Mudie: Your ruling is absolutely correct, Mr. Gale.
 The hon. Member for Harrogate and Knaresborough is far ahead of me analytically, and he found four objectives in the Bill. I could find only three—they relate to the funding gap, the introduction of a market and social inclusion—apart from the other padding that has been thrown in to make the Bill look half-decent in size, detain us for another week and keep my hon. Friend the Member for Warwick and Leamington and myself out of jam money. 
 Many of my hon. Friends and I object to two of those objectives: the fee increase and the introduction of the market. The Government's real intention is the basis of the amendment. The Bill is genuinely about putting a market in the education system through variable fees. That is sad, because the other two objectives then become questionable, as they damage the third, which is social inclusion—

Ivan Lewis: Will my hon. Friend give way?

George Mudie: I shall finish this point, then I shall give way; I should never find my place again if I gave way in the middle of a sentence. The Bill damages social inclusion, whatever the Government say—I accept their absolute sincerity—and will never, in my estimation, improve the chances of making university attractive to the poorest kids. If that is the Government's objective, all I can say is, they have a strange way of going about it. If—

David Chaytor: Will my hon. Friend give way?

George Mudie: I am giving way to my other hon. Friend after I have finished this sentence, so there will be a queue.
 The other objective is something that was raised by the hon. Member for Harrogate and Knaresborough, and it needs to be discussed. We might obtain more answers on this in Standing Committee than on Second Reading or in Select Committee.

Ivan Lewis: My hon. Friend faces a double whammy from Bury. If the objection to variability is a matter of
 principle, he did the job that I now do, in a very distinguished way, and further education and skills were at the heart—

Roger Gale: Order. I had to call one Back-Bench Government Member to order the other day for not addressing the Chair. It would be quite improper of me not to apply the same restrictions to the Front Bench.

Ivan Lewis: Can I have another go, Mr. Gale? I have been sitting on the Bench for so long that I am forgetting the rules of the game. In the context of further education, where variability has been the norm for as long as we can remember—the issue was never raised by hon. Members nor, so far as I know, by my hon. Friend when he did this job—why is there now such an objection to variability as a matter of values and principles? That is apparently a contradiction of the social justice and widening participation objectives that Government Members certainly view as central to our aspirations and ambitions for higher education. The hon. Member for Harrogate and Knaresborough failed to answer that question this morning. I ask my hon. Friend to try to tell me what the difference is, and where the values and principles are that divide us.

George Mudie: The next question, Mr. Gale, comes from the other hon. Member from Bury: they come not to praise you but to bury you.

David Chaytor: I hope that my hon. Friend's answer to me will be a little more developed than his answer to the Minister. My hon. Friend and I accept that we have fundamentally different understandings of the role of the market in post-compulsory education. Can he tell us how, at any time during that whole long post-war period, when there were no fees, and when grants were freely available, and even into the 1990s, when there was a part-loan, part-grant system, and even up to 1998, when there was a fixed fee system, that helped to widen participation as of right? Does he not accept that when higher education was wholly, or almost wholly, funded out of general taxation, it functioned entirely as an extension of the middle-class welfare state, and kept working-class young people out of university, because there was not enough investment to provide them with places or to encourage enough of them to continue education beyond the age of 16? What evidence is there that the system that he is defending—

Roger Gale: Order. It is time the hon. Gentleman gave way.

George Mudie: I enjoyed that speech; it was better than mine. I was always surprised at my hon. Friend's support for this policy, as I know his distinguished record, and his long history of keen interest in the post-16 sector of education, and I have to live with that. There is an old joke about someone in a certain country—I dare not say which one for race relations reasons—asking for directions and being told, ''Well, if I were you, I wouldn't start from here.'' That is exactly the point I made earlier, but obviously I was not clear enough.
 I hope my speech will be even more impassioned that that of my hon. Friend the Member for Nottingham, North (Mr. Allen). If the objective is widening participation, I totally support it, because that is why I am in politics. Education is the only way to get youngsters on board, away from the fight for survival of life in the inner cities and into prosperity. I cannot reconcile that with variable fees, starting at £3,000. I have already raised the level of fees with the hon. Member for Westmorland and Lonsdale (Mr. Collins)— 
Mr. Tim Collins (Westmorland and Lonsdale) (Con) indicated assent.

George Mudie: It is reassuring when you nod. It is when the fellow to your left looks up that I worry.

Roger Gale: Order. The hon. Gentleman is in danger of digging his own grave. If he has already raised the matter, it is repetition, and he does not need to raise it again.

George Mudie: I accept that advice. I raised the matter as an intervention, and I was advised to raise it with the Minister; it was good advice, which I shall take. The present fee was settled, with great assurances, and that will hang around our neck. I am not going to quote the manifesto, as I have got too much time for my colleagues, but I urge them to read the then Secretary of State's speech on Second Reading, when he proposed tuition fees for the first time. The present Secretary of State made exactly the same speech and gave exactly the same assurances. A fee of £1,000 was introduced in 1998, and we said, ''This is it. We will not revisit it.'' The present Secretary of State made concessions in terms of legislative powers and even offered to hold an all-party discussion on the subject of further safeguards, but it never took place because he won the vote on Second Reading—but there you are, that is politics.

Tim Boswell: I am following the hon. Gentleman's argument with a good deal of sympathy. Does he agree that not only did the then Secretary of State say, ''£1,000 and that's it,'' but the inference was that funding for the universities would be adequate and secured? That is where the problem arises.

George Mudie: Here we are in 2004, introducing a fee of £3,000. I hope no one will jump up and say, ''But they are not up front and the starting point for repayment is higher,'' because I accept that. But we are proposing a fee of £3,000, without shame, without even blushing—never mind variability or anything else. I think we live too comfortable a life in here if anyone on the Labour Benches can stand up, without blushing or apologising, and propose a fee of £1,125 that will increase in two years' time to £3,000, as a starting point. That is an increase of 130 per cent. We are all getting too comfortable in here if we can think that a 130 per cent. increase can be explained away by a later starting threshold for repayment that does not have to be made up front. That is £9,000, rather than £3,300. Let me put that in some context.

James Plaskitt: Will my hon. Friend give way?

George Mudie: In a second; I am on a good point here and I do not want my hon. Friend to spoil it. Let us put that 130 per cent. into perspective. What if the Government, in a fit of generosity, decided to pay us what we are worth? What if MPs' salaries were increased from £56,000, which some think is too low and others think is too much, to £120,000? That is an increase of only 130 per cent. How would that play in the streets? It would be considered obscene. I find it obscene.
 I have registered my hon. Friend's anxiety to spoil my point, so I shall keep going. I will give way to him when I need a rest. We are so out of touch. [Interruption.] My hon. Friend sighs. On services such as housing, police, education, social services, the Government currently insist that local authorities have a 5 per cent. cap on increases. Good. At the same time they do not see a connection with the increase of 130 per cent for their new policy. That is why I raise the matter. 
 Too often in politics—it is an old Thatcher trick, I am told—a fight is started elsewhere, everyone is distracted and the policy slips through. It is then too late. We realise that now. We are so worried about variability, with some reason, that we are taking our eyes off the fact that we have moved from £1,100 to £3,000. 
 Sitting suspended for a Division in the House. 
 On resuming—

George Mudie: I was making the point that at the same time as introducing this increase, the Government are tying local authorities, with equally valuable public services at risk, to a 5 per cent. cap. I am sad that they have made no connection. That leads me to what needs to be said in this Committee about university funding.

James Plaskitt: My hon. Friend is concerned about the increase in the fee, but talks about it purely from the perspective of it being an impost. Has he had the chance to talk to his local universities about how they might use the additional revenue that they will gain as a result of this change? I have spoken to mine. This will create a fund of £5 million to my local university to spend entirely on bursaries to help exactly the sort of young people that he and I want to help to get to university for the first time.

George Mudie: As always, my hon. Friend makes a valid point. That leads me immaculately to the point that I was about to make. I am a bit impatient with the universities. The ink was not dry on the 2002 public spending review when this matter surfaced. I was corrected by the Minister this morning because I was being less than generous to the Government, which is not my fashion. I said that £2.5 billion was put into the universities under that review, when it was actually £3 billion. Other sums were given for research. Because of those villains who sit on the other side in the Chamber, for 18 years universities were demoralised. Investment was slashed. Whichever part of the public service one looked at it was under siege. When the
 Labour Government came in, they had a tremendous job of rebuilding to do in the public sector, both of morale and infrastructure.
 Some members of the Cabinet have been too critical of the public sector. They were still at school or at university on grants when people such as my hon. Friend the Member for Warwick and Leamington and I were defending the public sector from Mrs. Thatcher. In contrast to the past six years, we had 18 years of investment being run down. I cannot think of any part of the public service that I go to that would not thank me for having doubled its money or given it a big cheque. We all therefore get understandably upset when such criticisms are made.

Jonathan R Shaw: Does my hon. Friend not agree that the police, schools and hospitals will always come before universities, so the 35 per cent. cut about which we have heard is far more dramatic? To sustain universities into the future, we need to have a sustainable revenue source.

George Mudie: As my hon. Friend the Member for Warwick and Leamington will confirm, I try to be a hard-headed finance fellow when I am allowed to attend the Treasury Committee and am not put on a Standing Committee. I accept the point that my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) makes.
 This is my starting point with regard to universities. If, in 1997, the universities had said that they were in a crisis, I would have believed them, and even if they had said that in 1999, I would have believed them, because we ran on with the Conservative's budget for two years. However, in the 2002–05 spending review we gave the universities the biggest settlement in their history. It is interesting that Labour Members say that that was not enough, because that was not how we sold the spending review. In our speeches in the Chamber about our approach to universities we did not say that—we talked up our support for universities. The Minister is proud of that £3 billion investment. It was a magnificent start. We are doing this—[Interruption.] Yes, I hear the mutters of ''start'', but we are discussing this Bill, which is considered controversial by half of Parliament. It is controversial in Labour party terms, and controversial because it brings a market into higher education three months before the next spending review. 
 I understand from attending the Treasury Committee that the next spending review will not be as generous as the last one. However, no one can attack the Chancellor, the Labour Government or the Cabinet for not going in the right direction. We are slowly rebuilding the services. 
 I will take notice of the mutters, because they are asking exactly what I want to ask the Minister. I asked the question of the Prime Minister at Chequers and the Chancellor of the Exchequer in the Treasury, and I even asked a certain Mr. Balls. The trouble is that I got three different answers, and if one asks the question of the same fellow twice he gives a different answer again. It is lovely that we have such a reasonable, honest and straightforward fellow as the Minister in the Committee until at least 5 o'clock, because we might 
 get some straight answers. The answer that we need is to the question: what is the funding gap that we are chasing? We need to know, because no one has told us. Dearing told us in the 1997 report that it was £8 billion to £9 billion, but those figures were not broken down as to infrastructure. 
 I make the point again that when the Minister responds he must talk about serious money and serious public budgets. If someone were to ask a local authority what its housing stock needs were in budget terms, it would say billions, but it would never get billions. The same would be true for social services, or any other part of the public sector. The Minister is a former trade union official and will have put many such cases for how much his members needed. One can ask, and one never underplays the asking. However, the universities asked for £8 billion and received £3 billion, and they are impertinent enough to be back for another £9 billion. I do not think that the Minister believes that because he is too hard-headed, but we are all in the dark. That was the point made by the hon. Member for Harrogate and Knaresborough. 
 I find it deeply offensive and objectionable being lectured to, perhaps even in this Room, by members of the Cabinet about the hard decisions that have to be taken. Some of us were taking hard decisions in the '80s when those same Cabinet members were running with the Trots that made us take hard decisions, and I will name names if they look pensive. When we were fighting Thatcher we took hard decisions, but the first thing we needed when pressed to take a hard decision was the facts on the table. 
 We are heading down the road whereby students, who metamorphose into graduates—

Kali Mountford: They do.

George Mudie: Yes, they metamorphose like butterflies into graduates, and free debt is not a worry to a graduate but it is to a student.
 The start to making a hard decision is knowing what the required decision is. We should barrack the hon. Member for Harrogate and Knaresborough for saying ''I will fill the gap with this.'' We do not know what the gap is. The worry is that we will wonder why we put in a fee increase of £3,000. I think that it is obscene and needs rethinking. Questions must be asked of an increase of 130 per cent. in an inflation age of 2.5 per cent. 
 I am a hard-headed finance man; I ran Leeds city council. When the Minister stands up and says, ''This is the basis for the decision. This is the gap,'' I want to know to what extent the £3,000 increase fills that gap. Another mystery is that we do not officially know—I asked three people and got the same answer each time—what net income will be raised by the £3,000 increase. If the 130 per cent. increase completely meets the deficit, why is the Minister putting the increase on future students? Would it not be more equitable to share that fresh burden with the Exchequer? I am pragmatic about students making contributions, but if the Government want to put part of the burden on them, we must know on what basis. 
 The Dearing report talked about the students' contribution being a quarter of their tuition fees. The former Secretary of State, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), confirmed that that was the accepted formula in 1998. I repeat the question, what is the gap? How much will the increase raise—not in the realms of fantasy, but in net terms? So many concessions have been given and withdrawn, so what is the definitive position? If the increase fills the gap, hard talking must be done. If it does not fill the gap, it fills me with horror. I am filled with horror if this method is applauded as a way to fill the gap and give the universities a sustainable income. I would even go as far as to use the words of my hon. Friend the Member for Warwick and Leamington about what universities do with the money. 
 Future students must be scared stiff. They knew where they stood with the former Secretary of State: their contribution was a quarter of tuition fees. The present Secretary of State has decided that there is a gap and that students should contribute more, thank you very much. No hard-headed trade union official would accept that sort of woolly argument in any negotiation. Let the Minister tell us the figures; let him reassure us that the six-year pledge made by the former Secretary of State will not be broken in another six years when the cap is reviewed. That is the sub-agenda for all the worries. If there is more money to be found, will the Minister come back saying that the gap is still there and that he needs another £3,000 per student? That is a genuine worry.

Simon Thomas: I wanted to intervene on the hon. Gentleman just as he was making the point that I wanted to make. To expand the argument that he has been making very powerfully, if we accept for the sake of argument that the figure from Universities UK of an £8.8 billion gap is correct, and extrapolate from that the number of students paying the full tuition fee, the result is about £1.4 billion. That leaves a significant £7 billion gap, which has somehow to be met. The taxpayer would meet that at some level. Does he share my concern that that shows that the Bill is more important to some people than just the funding aspect? There must be a principle in the Bill that drives it forward, and that seems to be variability and the market. Does he share that real concern about the Bill?

George Mudie: I am grateful for that contribution, because that is exactly the point that I am trying to make. The Government's intention to get a market into education has distorted other parts of the Bill, and the financial contribution is so outrageous that one questions why they are doing it. The point was well made: if the gap is £8 billion, why crucify youngsters in this way? That gap is not going to be plugged just like that. I am a fair man: if we ask students to make that contribution, why are we not matching it, and giving the universities another £1.5 billion? That would introduce some equity. When the Government turn round and hammer the customer, we are on difficult political ground.

James Plaskitt: I caution my hon. Friend about Dearing's figure of £8 billion, and urge him to consider all the component parts within it, because the
 important point about fee income for universities is that it will support their teaching budgets. Has he had the chance to talk to his local universities about how they will use the revenue? I have spoken to half a dozen in my region, and they tell me that their teaching budget will increase by between 20 and 30 per cent. per student. I remind my hon. Friend that that is to be set against the 36 per cent. per student under the previous Administration.

George Mudie: If the Minister was, in his former occupation a trade union official, like me—he was probably more senior than me and ran the place; I was just one of the office boys—and had gone to the employer to say, ''Look, put stamps up 130 per cent.—my members will be very appreciative because it will give them more money,'' that would not have been a serious argument: ho, ho, ho. If we put future graduates' fees up by £3,000 and make them, when they are students, face up to such a debt, that would be serious. Why not make them happier and make it £4,000 or £5,000? There must be a starting point—perhaps by putting Dearing on the table. I am totally pragmatic, but the Committee must know whether there is any firm anchor to what the Government think that youngsters should pay. That is all. It should be backed up with information on which we, and the voters—they are going to be paying it back—can decide whether it is sensible.
 I have asked a series of questions, so I shall try to make some progress because I have been stared at, perhaps justifiably. If I read my speech, and it is even more entertaining than what I have said so far, we should all be happy. We have got ourselves tied up with this market. You are experienced in this place, Mr. Gale, and this must make you smile, even though it is hidden behind your hand. I have never before been in a Committee, facing Conservatives, where we have been keener on the market than they are. I sometimes have to scratch my head and wonder what on earth has happened to British politics. 
 We want to bring in the market. I have listened for days now to the argument that there is market. My hon. Friend the Member for Warwick and Leamington has an economic background. I am not sure whether the hon. Member for Westmorland and Lonsdale does, and if he does I apologise. I might accept a definition of the market from my hon. Friend, but what is the market? What are we introducing? Do we have a market? There are differences. I do not think for a second that Oxford is the same as—I will not mention any other institution, because I do not want to start making comparisons. Every hon. Member is different and every institution is different. Institutions have traditions, history, endowments and research money. They are all different. But that does not constitute a market. 
 Two infamous individuals are considered to be the architects of our suddenly discovered policy on markets: a Mr. Barr from the LSE and a Mr. Crawford. They may be professors, but I will just call them Mr. Barr and Mr. Crawford. Mr. Barr gave evidence to the Select Committee. It must have been 
 hilarious evidence because he does not see a market. He does not even see a publicly funded university system. He sees communism.

Jonathan R Shaw: That is right.

George Mudie: My hon. Friend is a distinguished member of the Select Committee. He sat through the evidence, I am sure with a straight face. He is now implementing, with great gusto, an end to communism. This is what Mr. Barr saw as the present university system. He saw ''central state funding''. I do not object to that. If the universities lost central state funding they would be in a bad way. He saw ''control of courses'' and ''uniform fees'', both of which have existed in the universities for 100 years, as communism.
 The problem is ensuring that communism stays dead, after we introduce this. We know from Lenin, Stalin and Labour party battles in the '80s, that we must not let them fight back. Mr. Barr told the Select Committee: 
''Ensuring communism stays dead includes ensuring that the fees cap does not stay in place so long that central planning returns through the back door''.
 Later in his evidence—the architecture that we on the Labour Benches are putting in with gusto—he said: 
''The fees cap can be raised in stages, bringing in the benefits of competition and increasing resources.''
 I tend to agree with him. I know that it is communism, but I can live with central state funding and the control of fees. It might be seen as eastern Europe in some places, but it brought us to what the hon. Member for Harrogate and Knaresborough and others were saying about the university system. The university is not a profit cow. The university system is vital to this country's prosperity, if not necessarily the prosperity of individuals. The Government must have a great involvement. We will keep that involvement, but I do not know why on earth we want to bring in the market. I certainly do not see it as communism.

David Chaytor: In view of my hon. Friend's opposition to variable fees, the increase in fee and the method of repaying the fee, if the proposal in the Bill were for a graduate tax, would he support it?

George Mudie: That is an excellent question, and I wish that the Minister had asked it. However, I am glad that my hon. Friend has given me the opportunity to put the issue on the table. I have referred to the negotiations that have been and gone. At one stage in the negotiations with the Prime Minister, no less, it was agreed that there would be a commission—not a tame review of the effect that variable fees for three years would have, but a commission, which was to involve the Labour party policy process. It was named to report, in a sensible period of time, on the future funding of universities and to consider all the options. I agreed with the Prime Minister, and still do, but this policy was sprung on Members with a lack of consultation that we all regret.
 I look seriously at my hon. Friend the Member for Bury, North (Mr. Chaytor), and at all my hon. Friends. I have already put down my marker in 
 terms of my expertise in this field. I look to other Members for their expertise, and to their being allowed to play a part in the policy and decision-making processes. I am not going to dive in and say whether I agree with the proposals. I would like the opportunity—both as an ordinary Labour party member and as an ordinary Member of the parliamentary Labour party—to discuss what we are doing. I do not like reading in The Guardian that a new policy, which we have fought against for years, has suddenly become something that I must defend in this building. I think that the commission is an excellent suggestion. I am putting on the record what is kicking around: that one concession from the negotiations was that a commission would be set up, which would take time and great care to consider the options. 
 I will push the matter even further than my hon. Friend, and say that I hate the snobbery in the education world, particularly that in higher education as compared to further education, which has been treated disgracefully. We have simply put a bit more money into it, and have done things at the margin. I think that further education is almost more relevant to my kids and my city than universities, and I would have liked the commission thoroughly to study higher and further education. The matter should go through our policy process machinery; there should be real discussion and we should all have a part to play. We could refuse to allow higher education to be treated as a special case and to grab all the money. When will further education's turn come? 
 I will continue with my comments about the market.

David Chaytor: May I clarify one point? Is my hon. Friend saying that he might have been prepared to support a graduate tax had there been a different kind of policy consultation on it? Does he accept that the effect of a graduate tax would be identical in that individuals' payments would be variable?

George Mudie: I did not realise that my hon. Friend was trying to tease out inconsistencies. I said that I came to the matter with an open mind and that I did not think that the House, let alone our party, has had sufficient opportunity for a real discussion. We have been given variable fees as the way forward.
 I am a straightforward fellow, who has been in the Labour party for 43 years, and I do not expect to be treated in that way either as an MP or as a Labour party member. This legislation will disfigure higher education, but we have not been given the option to argue the case. At one stage in the negotiations, the Government were prepared to do that, but certain Members crossed the line and some concessions were dropped when the Government had a majority. That is a pity. 
 I accept in good faith what was said about the regulated market, but hon. Members must be aware of the damage that may be done once the market process has started—I am reading, so I will go very quickly. As hon. Members said, some universities, because of their history, tradition and so on, are more attractive and, in theory, youngsters have an equal chance of going to those universities. But those universities will want to 
 charge at the market level. As so many hon. Members have said, that will introduce a new factor into—[Interruption.]

Roger Gale: Order.

George Mudie: I do not blame hon. Members, Mr. Gale. Reading is not good.

Roger Gale: Order. Reading is not only not good; it is not permitted.

George Mudie: Do not tempt me to wander off, Mr. Gale. I shall attempt to follow your guidance surreptitiously.

James Clappison: I am listening very attentively to the hon. Gentleman's speech, which is extempore and to the point. Every member of the Committee should bear in mind his extremely important point that the principle of our higher and further education system is that everyone, whatever their economic, social or scholastic background, should have the same opportunity and the same chance.

George Mudie: That is like saying that rich and poor both have the chance to dine at the Savoy; it is a free country. The Savoy is very nice.

Ivan Lewis: Based on some of the things that my hon. Friend said about further education, does he not acknowledge that that sector is getting an increase in real terms of 19 per cent. in the current three-year period? He expressed reservations about the principle of variability, but he did not respond to my request to explain why he objects to it. He also expressed a reservation about the way in which the issue was handled, and hon. Members unkindly pointed out that my hon. Friend had been deputy Chief Whip.
 My hon. Friend referred to the time when he had to take ultimate responsibility as leader of Leeds city council. During those difficult years, hard choices had to be made and he will have had to put those choices to the Labour group on the council. There must have been many occasions when that group felt uncomfortable with some of the decisions that had to be taken. Was he tolerant of those people who, at the time, said, ''We will not be supporting your leadership and we cannot support you in taking these difficult decisions because of the way the process has been conducted''?

George Mudie: That is an interesting question. I can only answer factually and my hon. Friend will be able to check with his chief executive, who knows my record in Leeds. I was leader of the Labour group throughout the 1980s, which were troubled times, and it contained a spectrum of views, but the whip was not taken away from one member in those years. I think that answers my hon. Friend's question. I am merely making the point; I wish this Bill to succeed, but I fear that if we do not address the matter of variability, it may fail.
 I was interested in the apposite contribution on Second Reading of the former Conservative Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who raised a matter that I would have expected my Prime Minister to raise. The Prime Minister introduced many 
 hon. Members to Mondeo man to explain his political philosophy. He said that when he walked down the street before the election that we lost in 1992, he found aspiring working-class people who did not support or identify with Labour. He said, ''There is something wrong. We have got to stop being a narrow, sectional interest and be the party of aspiring people.'' The right hon. and learned Gentleman made the same relevant point. 
 I was delighted when my hon. Friend the Member for Bury, North said that he was worried about this issue, had raised it in the proceedings, and that it might be revisited. I do not make this point because of the Under-Secretary's history. However, when the Prime Minister addressed the parliamentary Labour party, he was asked a question by a very good MP, my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith). The question was simple: what does this offer the children of the postman and the nurse? Their joint income takes them over the £33,000 threshold. I subsequently asked the Prime Minister if he realised the reason for the question, because he skated around it in the meeting. 
 Some people in the Labour party believe that £33,000 is a lot of money, but it is not if people are raising kids and buying a house. I have already applauded the move to up-front fees, and have made my point. I accepted up-front fees and that the movement at the threshold was an improvement. However, I made the point earlier about the £9,000 debt. Someone—it could have been my hon. Friend the Member for Bury, North—said that he had not received many letters about this. I do not believe that many Members received letters about the poll tax when the Conservative party introduced it. Indeed, we fought a general election and neither side mentioned it. However, we all know what happened when the bills started to land on the doormat. 
 As I am sure my hon. Friend the Member for Nottingham, North said, letters about student debt have not come from our working-class estates. The issue is not on their radar. They have come from the postman, the engineer, and the people who are buying their house and who say, ''What on earth are you doing to our kids? We have worked and tried to better ourselves. We have moved out of our council house and bought another home. We work hard, and what do you do? Our kids go to university, but instead of having a £3,000 debt, they will have a £9,000 debt.'' The Prime Minister wrote my script on that. I believe that one thing that will be agreed in this Room is that no one in this Committee has bettered the political astuteness of the ex-Chancellor who raised the matter in the Chamber on Second Reading. That was his contribution.

Alan Johnson: He should have been the leader of his party.

George Mudie: I will not take up that comment.

David Rendel: The hon. Gentleman is making a brilliant speech. I bring to
 his attention a point that he may not quite have picked up yet. There may be couples whose children are coming up to university age. One parent may be in full-time work and the other in part-time work. Does he agree that that it may eventually pay for someone to give up work and their salary so as to reduce their household income?

George Mudie: That is a very good point, and I hope that the Minister will consider it. We have this battle all the time—whether about pensions or whatever other part of life—when we meet our constituents. Some people who choose to drop their job and pick up a lot of benefits often end up better off. That is where the working families tax credit has been so good. Our entire approach should be to encourage people to go to work, to make their contribution and to help their families prosper.

Kali Mountford: My hon. Friend talked about the postman. May I tell him about a care assistant who is on £16 a week more than income support? She will benefit when her son goes to university because of the widening access that is available to him. More university places will be funded by this total package, and it must be considered in its totality. It would allow the son access to discounted courses that he could not conceive of entering at the moment.

George Mudie: I have every sympathy with my hon. Friend. She makes a very valid point. I shall not repeat myself, but I refer her back to what I have said. She is in no position to say that either that what she described will happen or that it will not happen only because of the Bill. We do not have the financial information. I do not know why we are putting in the figure of £3,000, because I do not know whether it is for the past funding gap and or whether it is for an extension.

Graham Allen: One of the things on which we have information is the number of young people and their families who would benefit from a grant of £3,000 a year. There is currently no grant whatever. My hon. Friend rightly talked about concern for postmen and others in that percentage of people who may not benefit or who may be on the taper, but he should be very careful indeed not to throw the baby out with the bathwater. Despite his strongly views about variability, I hope that he will consider not only the 55 per cent. of families in his constituency who will qualify for a £3,000 a year grant, but the 65 per cent. of families in my constituency whose youngsters, if they claw their way up the ladder, will also qualify for that amount. There are principled points to make, but there is also a great deal to lose.

George Mudie: That is a good point and I shall deal with it. Social inclusion has not been helped in that respect. I would applaud the Government if £3,000 were being given without the £3,000 tuition fees being charged. We have had a complicated discussion about that, and I think that overnight the hon. Member for Harrogate and Knaresborough finessed the figures on the cost even more than I did. I appreciate the concerns that my hon. Friend the Member for
 Nottingham, North raised—that is what we are in politics for.
 We should consider what is being offered to working-class kids. They are being charged £3,000 in deferred fees, which means that they will have a bill of £9,000. Hopefully, the kids to whom we are giving £3,000 in a grant will pay off their fees and then call in the normal loan. However, I fear that there will be a worrying temptation to leave the £9,000 as a debt to be picked up when they graduate and to take their grant and the normal loan. My hon. Friend the Member for Warwick and Leamington and I have spent a useful six months getting into the ribs of Mr. Barrett, of Barclays, over credit cards and how blithely we are racking up debt. I appreciate that that is a different kind of debt, but the principle is the same. We heard some horrifying tales of spiralling personal debt. 
Jonathan Shaw rose—
Mr. Plaskitt rose—

George Mudie: I am not going to talk about the difference between the debt that we are discussing and credit card debt, because the Chairman would be on me in a second.

David Chaytor: Will my hon. Friend give way?

George Mudie: I must go on, because I have already overstayed my welcome. My hon. Friends feel comfortable, because there will be a regulated market, but exactly how will we regulate it? Are we going to interfere with the regulator? Are we going to give the regulator instructions? What is our starting point? I repeat: we need to know before we establish the system. The White Paper says that the level of fees must be low enough to be manageable, but I would welcome it if the Minister could say what that meant, either in terms of a percentage of tuition fees or an amount. Otherwise, it is meaningless, because the word ''manageable'' is open-ended. The Government's answer to everything is to employ regulators to take decisions away from Ministers, because they can be blamed and we cannot. However, regulators sometimes do what they want, so I would ask the Minister to consider the issue.
 I understand that the review board will make an announcement about the cap before 2010. To follow on from my previous question, do the Government intend to be proactive with the review board? Will they spell out what they regard as reasonable and manageable and what percentage they regard as the maximum? 
 I have some technical questions about differentiated fees. Some have come through by fax and I may deal with some later. I am happy for the Minister to confirm that this is wrong, but there is concern that the Bill gives no details about the way in which institutions may vary fees. How will they be able to vary them in and across academic years, or in the lead-up to an academic year, as part of a marketing exercise? I am keeping all my fingers crossed that the Minister will not ask me to explain any of that, although I am sure that he, with his expertise, will not need me to. How will institutions be able to charge students different amounts, based on their financial backgrounds? 
 It is also claimed that the Bill fails to cover the right to charge whole or partial fees to students who transfer between institutions part way through a course. There is no legislation to cover the issue and practice varies significantly. Indeed, several students have been charged the full tuition fee twice for one year when they transferred between institutions. Although I would not use such strong words, some people say that that will be simply intolerable under a system in which fees go up to £3,000 and that we should legislate against that.

Tim Boswell: Given the hon. Gentleman's argument, would he also agree that it is important to reach an understanding about the fees chargeable to students who withdraw during the year, given the potential for real inequity as well as academic failure?

George Mudie: The hon. Gentleman makes his point, and the Minister is already looking for the answer.
 There are also no measures in the Bill to prevent institutions from charging additional course costs for the use of, for example, library and computer facilities. Such costs can have a significant impact on the overall cost of studying. The Bill also neglects to provide for compensation for students who are over-charged, but perhaps we should deal with that later. I should be grateful if the Minister's efficient staff, whom he pays so little, could provide us with the usual good answers. 
 Finally—everyone will give a sigh relief—I want to deal with the serious issue of social inclusion. I have already dealt with the point about whether students are being given a good deal, which was raised in an intervention. However, there are some worrying issues, one of which I want to put to you—not you, Mr. Gale although I am sure that you would give me a better answer, but the Minister. Actually, I do not mean this Minister, who is beyond comparison, but the Secretary of State. I want to make a serious point about youngsters. 
 I started off by saying that, as the objective of the Bill was variability, other matters followed. I hope that I am not being unkind when I say that the Secretary of State discovered the working class. All the concessions came through in that area and they have all, sadly, been tied to accepting variability. Committee members should take a dim view of that. 
 I do not expect social inclusion, the power to help poorer students and widening access to be an afterthought in a higher education Bill. I expect those considerations to be central to it. I do not expect that the help given to youngsters should be concessions, nor that it should be given on the basis that it will be withdrawn—or may be withdrawn—if the central feature of variability is accepted. That is what we have heard from the Secretary of State on the Floor of the House. He cannot have his cake and eat it. 
 If we, as a Parliamentary Labour party, feel strongly about social inclusion and the need to get youngsters from poor and aspiring backgrounds into university, then some one has shown a lack of intention. A lot of the improvements were included because my hon. Friends the Members for Warwick and Leamington and for Cambridge had strong 
 doubts about those terms and were prepared to negotiate. Can the Minister assure me that those concessions—those agreements in the Bill—will not be withdrawn if common sense prevails and variability is taken out? They should stand on their own. 
 It would be outrageous if there was any suggestion that I, as a Labour Member of Parliament, was blackmailed into accepting variability because help for my least well-off constituents would be withdrawn if I did not vote for it. Will the Minister put that on the record? It is an important part of the Bill. 
 Even though I am in no position to do so, I should like to put a proposition to the Minister. I am worried about that situation. In the discussions that we have had, some Committee members are adamant those are great concessions and that it is a golden age for the worst-off kids. It is a window of opportunity that might close in 2010. I am sure that Committee members would want me to put that on the record and that the Minister will reassure me. 
 There is a suspicion in my tortured mind that, because we agreed on the figure £3,000, the objective of going for variability fees affected the other objectors. We were going with £3,000. There was uproar from Members on the Labour Benches, because they were concerned what that would mean to the poorest, working-class kids. There was a great response. My hon. Friend the Member for Warwick and Leamington played a part in that. 
 Immediately, a grant and a bursary were introduced and the fee element was agreed, which added up to the magical figure of £3,000. So we had no problem with those working class kids. But there is nothing in the Bill that indexes the £3,000—the maximum payment—to any increase when the cap is lifted. So it is indeed a golden age. Any working class youngster from the poorest sector can get that grant of £3,000 to match the fees. 
 Let me present a wee scenario to Committee members. It is not outlandish when the behaviour of Oxford is considered. The Sunday Times ran a front page story before the White Paper came out. That was bad timing. It was embarrassing. It put pressure on Ministers—vice-chancellors should not do that. The newspaper ran an embarrassing story saying that £5,000 was not enough, they wanted £10,000 and upwards. They felt that they could justify that. Let us take 10. Is there a Member who is brave enough to stand up and say that Oxford, with its traditions, research record, endowments and prestige, will not be able to charge £10,000 if the cap is lifted? What if a working-class youngster from an estate wanted to go to Oxford under those circumstances? The grant is not automatically index-linked to the highest figure. This has been cobbled together to get us to vote for the Bill by taking those poor working-class kids off our consciences. 
 I want working-class kids to go to Oxford for the next 30 years. That would be great. It would be a revolution. However, if variable fees were established and Oxford's fees became two, three or four times 
 higher than others—£10,000 compared with £4,000, for instance—as the Bill stands poor working-class youngsters would be faced with fees of £30,000 plus loans to pay on top of that with a grant of £3,000 per year, which I presume would be index-linked. I would be happy to be reassured that that would not be so. 
 I am thinking about the future. If the Minister is going to force variability through, Labour Members should at least demand the concession on behalf of the poorest that the grant should always be linked. I think that that gives the Minister some problems. Maybe not: maybe he has money. That gives a blank cheque to the universities, backed up by the Chancellor. I will be interested to learn whether the Minister can give us an assurance on this. If he cannot, there will be a golden age—a window of opportunity between 2006 and 2010—for working-class youngsters. They should use it, if the cap lasts that long; if they do not, they may have lost their opportunity. 
 I am grateful for your patience, Mr. Gale. I am sure that you are praying that I have covered all the points that I have got to make, and I have.

Simon Thomas: I am pleased to follow the speech of the hon. Member for Leeds, East (Mr. Mudie). I enjoyed his contribution immensely, and he made some very forceful points. His speech and that of the hon. Member for Harrogate and Knaresborough exposed the central problem that many of us have with the Bill, which is not the Government's aims and objectives but the Bill's workings and long-term implications. Our central problem is not the fudge that has been arrived at now but the opening up of higher education as a marketplace in which we trade with young people's futures. That is what causes me great concern.
 It was a long time ago when the hon. Member for Cambridge opened the debate on amendment No. 82, which I was pleased to support. I want to talk about three aspects: the market, social inclusion or exclusion—that depends on which side of the divide people are on—and the funding gap, but first I want to mention two things that have come out of this debate. I think that we all agree that we need more maths graduates and better maths teaching in schools, because some of the understanding of mathematics during this debate has been a little ropey. That applies to hon. Members of all parties. I am also reminded of an argument I had with my daughter when she was about six. I promised that I would give her £1; although I did not have the shiny pound coin she wanted, I had the change that added up to £1, but she would not accept that all that change added up to the same amount as a shiny pound coin. 
 The central thing that we have to see in this Bill is the point that the hon. Member for Leeds, East concluded on. The Bill adds the £3,000 tuition fee—which is what the sum will be most of the time, although it will be variable—to the £3,000 grant to the poorest students. Taken together, they do not add up to more than zero. There is a trade-off. [Interruption.] We know it is a trade-off because it was not in the White Paper and it was not in any earlier discussions. 
 It came at the very last minute—an obvious trade-off. In that respect, the trade-off gives rise to the questions: why is that sufficient to take the Bill through, at this stage; why was it able to get the minimum support that it received on Second Reading; and what is so important about this Bill? [Interruption.]

Roger Gale: Order. There are too many private conversations taking place in the room. There are lovely green benches outside where hon. Members can discuss anything they wish.

Simon Thomas: Thank you, Mr. Gale.
 I question the reasoning behind the Bill. If it was simply a Bill about delivering £3,000 maintenance grants, I do not think we would be discussing it today. The problem with the Bill is the element of variability. We have been bought off, for the time being, with an extra dollop of cash up front, for some students. That sweetens the pill but does not change the effect of the medicine on our universities.

Jonathan R Shaw: The hon. Gentleman said that the issues of fee remission were not discussed until recently. That is not the case. We raised this with the Secretary of State a year ago. He looked at the consequences of accepting the principle, to which he has come round.

Simon Thomas: I did not quite say that. I said that the £3,000 trade-off, balancing maintenance grants against tuition fees, did not appear until very late in the day. The specifics did not appear. They are important, because they lead to that nil sum for poorer students, which was vital to get some Labour Members to support Second Reading but does not hide the central problem of the Bill—the introduction of the market into higher education.
 The question has been raised about the market in further education and in part-time higher education. The existence of a market in other sections of our post-16 and post-18 education is not, in itself, a wonderful justification for introducing the market into tuition fees. I believe the question is whether the market in further education works for the benefit of students. We must look at this more closely. 
 What is the nature of this so-called market? For part-time students, the existence of current fixed rate tuition fees acts as an equaliser in the market. In fact, there is no real market, because there is a stabilising element. Within further education, we have to bear it in mind that markets work only when there are price mechanisms, incentives and penalties. Speaking for my own constituency and the other areas of Wales with which I am familiar, that does not happen in further education. We are not talking about tuition fees of £3,000 or even £1,000 in further education—if I can use the term tuition fees. We are talking about hundreds of pounds. It is still an obstacle, but it is not of the same magnitude.

Chris Grayling: I can update the hon. Gentleman's figures still further. Last week, the Under-Secretary kindly responded to a written question, informing me that the average fee paid by an 18 to 21-year-old in further education is only £135. It is not hundreds, it is hundred.

Simon Thomas: I am grateful for that specific figure, which only adds to my argument. The situation of a student who goes into further education for two years, at £135 per year, and leaves with a debt of £270, is very different from that of one who leaves with a debt of £9,000. In my discussions with further education colleges' lecturers and principals, not one ever mentioned the issue of fees being a problem in attracting students. There are other problems. In my area, transport is a problem for students who wish to attend a further education course, not fees. The element of variability that may exist between £135 and £95 is so minimal as not to be in the same league as tuition fees for higher education.

Tim Boswell: Supplementary to the argument that the hon. Gentleman has just put, would he not agree that the total proportion of further education revenues raised by fees is assessed at about 8 per cent. of the whole, which is less than the amount that would be generated for higher education by the Bill? Yet, at the same time, perhaps it is not without significance that in further education Ministers are anxious to increase that percentage significantly.

Simon Thomas: Yes, that is an important point, though I am aware that we are not discussing further education at this stage. However, we are discussing the principle of variability. In that context, the principle of public funding—whether for higher or further education—needs to be teased out from the Minister. I am sure that he will have the opportunity to go into that in more detail.

David Rendel: Did the hon. Gentleman also pick up the point, made powerfully by the hon. Member for Leeds, East, that one may have a £3,000 grant to match a £3,000 fee now, but once the cap is lifted, there is no guarantee that the two sums will match. At that point, variability means that the least well-off students may have to start paying major fees.

Simon Thomas: The hon. Gentleman is correct in that regard, and the hon. Member for Leeds, East made a—

David Chaytor: Will the hon. Gentleman give way?

Simon Thomas: Let me just finish that point. Obviously the hon. Gentleman does not agree, but I think that the hon. Member for Newbury (Mr. Rendel) is correct. The hon. Member for Leeds, East made a reasonable point, that there is no link between variable tuition fees and the maintenance grant. The maintenance grant may be £5,000 in 10 years' time—I do not know, but it may go up. It would be wonderful if it did, but there is no guarantee.

David Chaytor: My point was that the hon. Member for Newbury was not correct when he said that the students would be liable to pay additional fees. The whole point of the Bill is that students do not pay fees: graduates pay fees. The continuous attempt to elide the two is dishonest. Is there a single student who will be paying a fee as a result of the Bill? Yes or no?

Simon Thomas: I know the point that the hon. Gentleman is making, but I did not say that—it was the hon. Member for Newbury who said that.

David Chaytor: The hon. Gentleman said that the hon. Member for Newbury was correct.

Roger Gale: Order.

Simon Thomas: I said, Mr. Gale, that the hon. Member for Newbury was correct in his analysis of the link between tuition fees and maintenance grants. I do not care whether one calls students ''students'' after they have graduated or whether one calls them by another name. What one calls them is not important. As soon as they finish university and put the last full stop on their last final paper, they will know that they have a debt of £9,000. That is not even when they graduate, because they may fail their exams but they will still have that debt. Therefore, they may not be graduates. I do not think that pushing the matter away three years down the line necessarily changes the effect. However, I want to address that point a little later.
 I want to make a final point about the market. The hon. Member for Westmorland and Lonsdale made an acceptable speech in his terms. I am trying not to give him too much praise, because I did not agree with the principles of it, but I am not in any way denigrating the way in which he gave it. It was useful to tease out some of the Conservatives' ideas on the matter. Variability was not a problem for him. 
 That also came out on Second Reading, when the right hon. Member for Newport, East (Alan Howarth), who of course was once on one side of the House and is now on the other, said something similar. If there is going to be a market, variability is important—it is a core need. The Conservatives recognise that there will be a market. I do not want to go into why they currently oppose it. However, they did, to be fair to them, say in their manifesto that they would not introduce top-up fees, and they are sticking to that, which is fair enough. Incidentally, in Wales they also said that they would support the devolution of tuition fees powers, but now they are opposing it in this Committee. That is something to be taken up with the hon. Gentleman's Welsh colleagues. 
 What I really want to ask Labour Members is, in the concern that they genuinely have, and that I share, for increasing access and participation and dealing with the poorer students, and for ensuring that working-class kids can go to university, are they convinced that markets work to that end? In what other area of social policy can we say, with hand heart, as socialists, that markets work? [Interruption.] Markets certainly do not work in housing in my constituency. I would be delighted to have a debate with the hon. Member for Cambridge about that. The housing market is excluding the poorest people in my constituency, where we have not had a new council house built in 10 years. It is not working for the poorest people in my constituency. 
 The essential feature that I thought the Labour party stood for and that certainly we, and in this regard the Liberal Democrats stand for, is that we need to intervene in markets to make them work for our best social aims. We need to drive those markets to meet our social objectives. There is not much 
 disagreement, certainly among three factions in this Committee, on what those social objectives should be in this Bill. There is a real disagreement about whether the chosen mechanism, using a market in higher education, will achieve those aims. That is the heart of the debate and at the heart of the amendment. 
 In a sense, this is a question of faith, conviction and belief. As the hon. Member for Leeds, East said, we do not have an absolute explanation of the funding gap or of the amount of money that would be available. We have a general idea. We have organisations such as Universities UK and Scope telling us about the funding gap, and we have proposals from the Government about variable tuition fees meeting part of that funding gap. However, for those of us who want people to get to university, it is very difficult to see how that will work to their benefit. 
 Having said that this is definitely a market and we are talking about how to regulate that market, we now want to see how it would affect the poorer students in our areas. The first question is what puts working-class kids off going to university. I was fortunate enough to go to university in 1982.

Tim Collins: Under a Conservative Government.

Simon Thomas: Indeed, under a Conservative Government, just before my community was ripped apart by the miners' strike and the end of any sense of community values.
 Going in that year, I got a full grant under a means-tested system—something like £1,500 per year and no tuition fees, of course. At that stage, in the coal-mining community in south Wales that I came from, I was unusual. At that time working-class people were not making the choice to go into higher education. Yet there was a full grant available and there were no tuition fees. It was attitudinal problems, ideas and—[Interruption.] I think the Under-Secretary said ''culture''. It is stronger than culture—it is stereotypes and people's perceived attitudes. 
 It is 20 years later and things have changed, but what do we still have now? When the first tuition fees came in, we in Wales commissioned the Rees report, an important report to the Assembly Government. On 12 February 2002, this is what the Labour Minister for Education in the National Assembly, Jane Davidson, told The Guardian: 
''Rees told us our concerns that potential students are put off applying for courses because of student hardship—either real or perceived—were well founded.''
 We are talking about reality and perception here. The first point to make about attracting poor students to university is that the evidence—certainly in the Welsh context—shows that student hardship, as well as the perception of it, is a real barrier. Does the Bill address that? In a way it does, because it provides grants. We have had grants in Wales for the three or four years since the Rees report. We have addressed that issue in Wales—outside the Barnett formula, it has to be said. 
 In one sense, the Bill addresses the issue; in another, it knocks down any advantage by promoting the idea of the deferred payment of tuition fees. That results in a neutral at best, and I would tend towards the conclusion drawn by the hon. Member for Leeds, East 
 that it is in fact a deterrence. In my view, it is certainly not a great attraction to such students to go to university.

David Chaytor: Could the hon. Gentleman explain why, since the individual costs of going to university have increased—first, by the introduction of the part-loan, part-grant scheme in the early 1990s, and secondly by the introduction of fees in 1998—the numbers have continued to expand?

Simon Thomas: The numbers have continued to expand, but the proportion coming from poorer backgrounds has remained static.

David Chaytor: No.

Simon Thomas: It has, just about.

Alan Johnson: I am grateful to the hon. Gentleman for mentioning the issue. To set the record straight: numbers have not fallen, as the Liberal Democrats claimed at one time, but there has been a tiny 1 per cent. increase in participation for social class VI. There has been no change either way: youngsters from poorer backgrounds have not been put off and there has certainly been no push to attract them to higher education. The result has been neutral.

Simon Thomas: I say static; the Minister says neutral. I think that we are about the same and that he will agree—I hope that the hon. Member for Bury, North, having had that reply, will do so as well—that it is a reasonable test of the Bill to try to perceive whether it would increase the number of people from poorer backgrounds who go to university.
 The second question we need to ask ourselves is what factors could change the number of people from such backgrounds who go to university. We can look at the institutions that are already active in that field and ask ourselves what the best practice is. What really works and attracts people from that background to university? 
 Several points can be made about successful practices. The first has already been mentioned, but I have seen it working. The university of Wales in Aberystwyth runs a summer school. There are no expectations of the young people who attend and they do not have to sign up for a university course afterwards. They come, aged 16 and 17, to a relaxed, non-threatening, almost non-academic environment and they are gently encouraged to put university education further up their agenda themselves. It works well. To do more of that, universities will need more money—that is clear. I will just park that idea for a second; I will return to the funding gap shortly. 
 The second successful practice is the principle of bursaries, which is tied up in the Bill. I do not want to get too much into a discussion about the issue of £3,000 or £300 because we have already had a reasonable debate on that and also because it is an England-only part of the Bill. I bear it in mind that Wales might have a very different system. Nevertheless, it seems to be quite useful for universities to be able to tailor bursaries to individuals. That individual feels encouraged by receiving that bursary to make that leap and to determine to go to that university to study that subject. 
 From a personal point of view, it certainly worked for me. I was fortunate enough to do that. 
 Those are just two ideas. I am sure that there are many other examples of good practice of outreach work, going into communities, using part-time courses, encouraging people to consider graduate courses as a result of part-time study and so on. All those things are happening; they all need money. 
 My final point is about the funding gap and the way that we are trying to address such things. We do not know for certain what the funding gap will be. A figure of £8.8 billion has been calculated by Universities UK, which is similar to that used by many experts in the past. We know that the Bill will not raise £8.8 billion in 2006 or 2009 because it is capped. It will raise a significant amount of money and, through the other mechanisms involving OFFA, a lot of that money will be used to encourage students that university is a good lifestyle choice. There is no problem with that in principle, but the fact that that system of variable tuition fees will not, as we must all acknowledge, meet the funding gap raises the question of what the system is for. 
 In that context, the inevitable conclusion is that, at some stage, universities in England, Wales and Northern Ireland will have to ask the Treasury for more money, whether directly or through the Barnett formula. The Bill will not provide enough funding to meet universities' current requirements as well as their new obligations to encourage more students from particular backgrounds to attend university. The universities will therefore have to find more direct funding, which will come from tax. Is the Bill, in making students pay directly, simply preferable to facing up to the tax implications of funding university education to the Government's targets through the taxation system? 
 It is worth putting on record the figures given in the Universities UK report on public expenditure on tertiary education as a percentage of gross domestic product. At the top of the list is Finland with 1.7 per cent. of public expenditure going to tertiary education. The UK is No. 26 on the list with 0.7 per cent., lagging behind Mexico, Slovakia, Ireland, New Zealand, Greece and Turkey, which are all countries with varied educational achievements and investment. 
 The final nail in the coffin of the Bill should be that it does not deliver the necessary funding. Betrayal might be too strong a word, but the Bill will lead to false hopes in the university sector and certainly among young people. Realistically, young people will not feel able to access the funds needed to support them at university, and universities will not be confident of having enough money to invest in the programmes that we want them to. 
 The final cruel aspect of the Bill, which we have not even mentioned in the past day and a half of debate, is the particular effect that the method of funding and type of market could have on some universities. Let us forget about the students for a moment and consider the universities as institutions. How will some universities face up to the needs of dealing with the tuition fee system and its implications? Could that 
 create a two-tier system? Could it exacerbate existing trends, whereby some universities have lots of money and facilities for research while others are, de facto, little more than teaching institutions and more like old polytechnics? 
 How will those circumstances and the funding gap that will remain help the poorer universities—there are poorer universities as well as poorer students—to address their funding needs and move on? How do these measures link to the proposals being made, which are opposed by the Association of University Teachers, on the new way of teaching for academic and related staff? Should all this make us concerned about the possibility of having a higher education system that not only fails to be inclusive—a system that we have not given sufficient resources to be inclusive—but, over time, develops into a two-tier system? We have seen that with markets generally in secondary education and particularly in the health service. 
 Those are the reasons behind my concerns. This is why the amendment is so important and why it goes to the heart of the Bill. This is why we have spent so long discussing it—the other amendments are not somehow irrelevant, but everything flows from this one. We will talk shortly about devolution, for example, but until we sort out this issue at UK or England and Wales level, there is little point in talking about devolution. That is the core of the issue; it is part of the vision. With all respect to Labour Members who made impassioned and well-thought-out arguments for the poor people in their communities, somehow I remain unconvinced that their enthusiasm and the principles that I subscribe to are reflected in the Bill. 
 Finally, what happens after 2009–10? Let us say that the principle of variability and variable tuition fees are introduced—and the fees capped, for obvious political reasons. Governments do that; this is not a criticism, but an explanation. What happens after that? The pressures in certain areas of the higher education sector are too great. The argument is led by the Russell group, but other institutions are involved. The pressures are much too strong to allow me to be confident, with the social conscience that I want to have in politics, that such a market can be properly regulated and controlled by the House, so I do not want even to step on that path. 
 Perhaps things will be okay for the next three or four years, but I see dangers down the line and I do not want even to start that journey. That is why I hope that the hon. Member for Cambridge will press her amendment to a vote. I also hope that the House as a whole gets an opportunity to vote just on this central principle. 
 The Government, by saying that they have no plan B and that this is the only thing on offer, are putting every part of their vision for higher education behind variable fees. That is a mistake, but I also have major concerns about where it will lead us. Therefore, although I share many of the objectives of the Bill 
 and Labour Members in particular, I think that we would be wrong to maintain this aspect of it. I still hope that Labour Members, who have had a lot of influence so far, can wield a bit more on the Bill.

Alan Johnson: I am not sure whether I should welcome you back or you should welcome me back, Mr. Gale. This has been a long and wide-ranging debate. I shall try to be as concise and focused as possible, but at the same time respond to many of the important points that have been made. In fact, I hope I can respond to all the central points. I might be able to deal with some more detailed issues, although I may have to write to hon. Members on them. I have the information, but whether I deal with those other issues depends on how long I speak for.
 Incidentally, I am conscious of the fact that the Opposition parties are batting on our wicket when they discuss these amendments. The argument that they have made on amendments Nos. 110, 3 and 120 and even, in a sense, on variable fees is that they are opposed to fees per se—they do not want them—but that if there were fees, they should operate in a certain way. We shall move on to a group of amendments that are very much on our wicket and I do not intend to use up all the arguments on fees during this debate. 
 It is fair to say that this has been a feast of a debate, but there is broccoli and carrots and there is meat and gravy. Without being too unkind to the hon. Members who tabled amendments Nos. 3, 120 and 110 and my hon. Friend the Member for Nottingham, North, I shall deal with the broccoli and carrots first—it is nutritious, tasty and important—before coming on to the meat, which is the central question of variable versus fixed fees. 
 Amendment No. 110 is designed to exclude medics, vets and teachers from fees from year four onwards. I should say first that it raises an important concern for Members from all parties, but the problem is that it is flawed. The hon. Member for Westmorland and Lonsdale may realise that, and it may be probing, although I understand that there might be a vote on it, but, as it is linked to the conditions of the grant set by the Secretary of State, it would mean universities being able to charge whatever they liked for medics, vets and teachers from their fourth year onwards. 
 I know how frustrating it can be to deal with such issues on technical grounds, so I will try to deal with the substance as if there was not a technical flaw, although it would be wrong not to mention it.

Chris Grayling: Is it not true that under section 26(4) and (5) of the Teaching and Higher Education Act 1998, the Secretary of State would retain powers to prevent that from happening?

Alan Johnson: The hon. Gentleman may be right, so let us deal with this as a general issue and as if there is no technical flaw. I have been advised that there is a flaw and I am sure that inspiration on the point may hit me before the end of the debate. [Interruption.] Inspiration arrives quickly these days and I can say on reflection that the answer is no, because schedule 26 will be repealed by the Bill. The amendment is flawed.

Tim Boswell: Unless I have misread the provisions of schedule 7, with which I am sure the Minister is thoroughly familiar, the Bill repeals section 26, not schedule 26, as he inadvertently said.

Alan Johnson: As always, the hon. Gentleman is extremely helpful. He is right—I should have said section 26. That is the trouble with getting a piece of paper that says ''S26'' on it, not that I want to reveal any secrets of government.
 This is an important point. The amendment is unfair and unnecessary. The hon. Member for Newbury is not present, but in his contribution a few days ago he said that it would cover all students from their fourth year onwards. However, it covers only medics, vets and teachers, which is unfair. Also, modern language and architecture courses take longer than three years, so it does not cover everyone. However, my main point is that it would be wrong to say in primary legislation that certain groups are excluded. One reason for that is that even if we added to the list we would probably not cover everyone, but the main reason is that employers, and the Government in particular, are already dealing with the issues. 
 The hon. Member for Ceredigion (Mr. Thomas) mentioned the NHS, which has a direct contract with universities rather than working through HEFCE. The NHS has made it clear that that contract will not be affected by a change in fees, and it means that midwives and nurses are not to be charged any fees. The hon. Member for Epsom and Ewell (Chris Grayling) made an important contribution yesterday on the basis of the rigorously researched fact that radiography students would have their fees increased from £12,000 to £26,000. The slight flaw in his argument is that they do not pay any fees now and will not pay any in future, because they come under the NHS contract. In London, they even get a bursary of about £2,700, so dealing with those groups is very important for the Government, for both the public sector and employers. 
 The hon. Member for Hertsmere (Mr. Clappison) raised an important point about vets. I said that the figures were wrong, although to be fair he had referred to applications and the figures I gave were for acceptances. What we do know is that veterinary science is oversubscribed, so there is certainly no problem in terms of getting vets. That must be the issue that employers consider in relation to whether they need to provide assistance in this way.

Chris Grayling: Before the Minister moves on from the issue of radiographers, may I clarify whether he is saying that radiographers are exempt from fees in the first three years of a degree course?

Alan Johnson: My information is that radiographers do not pay any fees as they are exempt per se.
 We believe the framework in primary legislation should be the same for all students, but there is a serious problem here. The wording of this amendment, even if it was not flawed and was perfectly reasonable in all other respects, would interfere with a university's charging policy. More importantly, it would transfer 
 the financial obligation to meet the cost of those students from the employers to the universities. At the moment, the university charges a fee, but that is paid on behalf of the student by the NHS or the DFES. This amendment says that students would not be charged the fee in the first place, meaning that the universities would have to pay for them, which would be entirely wrong.

Tim Boswell: Having made a micro-intervention recently, I would like to make a more substantive one now in relation to those future professionals who spend more than three years on their course. The Minister has mentioned architects as well as vets, and there will be one or two other subjects whose students study for an extended period. Not all of them will be employed by the public sector, and some will not have employers of any kind—for example, vets who go into private practice and are not salaried, or who soon become partners.
 I do not ask for a definitive assurance, but will the Minister accept that it is important, particularly in respect of the Langlands review he is setting up, that he should continue to look at the problem of access to the professions that are not necessarily in the public sector? Some of these professionals—vets and architects in particular—clearly carry an important public interest.

Alan Johnson: That is a point I was going to come on to. The hon. Gentleman is absolutely right, and my right hon. Friend the Member for Tyneside, North (Mr. Byers) raised on Second Reading the very concerns that he has raised. That is why we have set up the committee under Sir Alan Langlands, the vice-chancellor of Dundee university, to look at the effect of these measures on professions such as architecture, particularly for those people outside the threshold for grants and bursaries. Sir Alan will commence his work next year and it will be ready for 2006. The committee will look at best practice among employers and consider all these problems to see whether there is anything further the Government need do. Amendment No. 110 is not the way to resolve this important issue.
 Amendments Nos. 3 and 120 deal with writing the £3,000 cap into the Bill, and the retail prices index plus, which is the mechanism to increase that cap. The Opposition voiced concerns about what will happen after 2010. A Government amendment to clause 24 will ensure that the pledge given by the Secretary of State in the White Paper in January that we would not increase the cap for the period of the next Government will be written into the Bill. That has not happened yet, Mr. Gale, but I hope that you do not mind my referring to it as it is important to the debate. 
 I am pleased to see the hon. Member for Newbury back in his place as I mentioned him earlier. He said that, at his fascinating dinner in the Oxford McDonald's, a college principal spoke of the fee cap going after 2010. The fee cap does not go in 2010. 
 The fee cap is where it should be in the legislation. It is the practice of Governments of all persuasions to balance what goes into primary legislation and what 
 goes into secondary legislation. The level of the fee cap ought to be set in secondary, not primary, legislation. When my hon. Friend the Member for Leeds, East was a Minister in the late 1990s, the fee cap went into regulations—into secondary, not primary, legislation. That is the proper place for it. 
 I shall return to the other points made by my hon. Friend the Member for Leeds, East, but he asked about tracking student grants and bursaries and the student support package with the fee. Of course, the amendment would keep all the important issues such as the maintenance loan and the grant in secondary legislation, but it would put the fee into primary legislation.

Tim Collins: I know that the Minister was about to move on, but I wonder whether he will, with your indulgence, Mr. Gale, jog back half a step. He said that he would prefer a Government amendment—which we may or may not have a chance to debate later—to amendment No. 3, which we are debating now. Amendment No. 3 specifies the retail prices index, with no room for interpretation, but the Government's amendment merely says that the Secretary of State must be satisfied that the RPI has been followed. When so much turns on the question of trust, it would be desirable for the RPI to be written into the Bill, with no question of interpretation.

Alan Johnson: The hon. Gentleman has a point, but there are two types of RPI—one includes mortgages and one does not. We increase student grants by one because, by and large, students do not have mortgages, but we increase thresholds by the other because it applies to families and not students. That is a complication, but it is a reasonable point.
 My argument may be more relevant to clause 24, but it is entirely relevant to this debate. Many hon. Members have said that the problem is a question of trust. I understand that. I have heard so many speeches not against what we propose but against what we might propose in future—and against what we propose might lead to. I am well aware of the concerns expressed about what will happen in future. I shall press the amendment to clause 24 so that the assurance given in the White Paper can be included in the Bill. With or without that amendment, we say that any change to the fee cap must be made by the affirmative resolution procedure, not the negative procedure. Although we cannot do it in legislation—if we could, we would—we give an undertaking that if Labour is in government, the statutory instrument dealing with the matter will not be taken in a Committee but on the Floor of both Houses. That will ensure that all Members have the opportunity to speak if called, and they will all have the right to vote on the matter.

Chris Grayling: That is obviously important, but I seek an undertaking from the Minister, in his capacity as the lead Minister in the debate, that the Committee will have adequate time to debate and fully understand the Government amendment to clause 24, so that we can be totally satisfied with the guarantees that they are giving.

Alan Johnson: I look along the Bench to where the Whip usually sits, as I am not totally in command. Hon. Members are in command, with the Chairman and the Whips. I want to get to those debates, and I want the debate on those amendments to be full and I want to provide as much information as I can. That is the only reasonable reassurance that I can give.
 In relation to amendments Nos. 3 and 120, the Government believe that we have given as much reassurance as we can, given that Parliament will make the decision. The people who argue in the meetings that I hold around the country that the provision should be in primary legislation have a valid point in terms of where they think these things should go, but parliamentarians will have the opportunity to vote on this. That is an important safeguard. 
 The cap stays until 2010. The feeling behind the amendment is that it might shoot up into the stratosphere thereafter. From my experience last June, I doubt that any Government, of any political persuasion, could lift that cap willy-nilly to some figure plucked out of the blue. If they thought that before the experience of the debate since last January, I do not think that they will think it in future.

George Mudie: I understand the point that my right hon. Friend is making and I am not unsympathetic to it. When the statutory instrument comes to the Floor of the House, will we be confined to a debate of an hour and a half as in Committee? That somewhat limits the concession in terms of hon. Members' ability to participate in the debate.

Alan Johnson: You, Mr. Gale, and my hon. Friend know more about these procedures than I do. I am advised that we can put two together and have a three-hour debate. [Interruption.] The hon. Member for Westmorland and Lonsdale laughs. That is what I am told. The rules allow two debates on a statutory instrument, one following the other, which adds up to three hours. The decision will be on one issue: should the fee cap be raised? Other issues will be raised, but the decision that Members will be asked to make in such is a debate will be simple.

Patrick Hall: May I just clarify whether any discussion about raising the cap will not be around a figure that is plucked out of the blue, but around a figure that is based on research and analysis and a report from the commission that the Government hope to institute if they win the next election?

Alan Johnson: I am enormously grateful to my hon. Friend, who made a very good contribution on Tuesday, for asking that question. I would have missed that point. He is absolutely right. The independent commission that will report directly to Parliament will be set up in 2009, after three years of operation. If our debate takes place after 2010, it will be informed by that report.

Anne Campbell: Will my right hon. Friend clarify remarks that he made on Second Reading? He was responding to my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who said:
''He has guaranteed that the cap will not rise during the course of the next Parliament and that it would require primary legislation to raise it within that time. It has also been said that if the commission recommended significant changes thereafter, it would be likely that primary legislation would be required. Would an increase in the rate of variability count as a significant change?''
 My right hon. Friend replied: 
''Yes, it undoubtedly would.''—[Official Report, 27 January 2004; Vol. 417, c. 268.]
 Could he clarify whether that means that a significant rise in the level of the cap would require primary legislation, even though it may come after the 2011 deadline?

Alan Johnson: As my hon. Friend will be aware, the discussion I was having with my hon. Friend the Member for Birmingham, Northfield was about a rate of variability idea that he had in which the maximum fee should always be a multiplier of the standard fee. That related to the rate of variability discussion that we had had that very morning. His question to me was very focused and dealt not with fee caps, which we are debating now, but with the rate of variability. Hon. Members will have received a paper about the rate of variability from the Campaign for Mainstream Universities, which thinks that there should be a floor and that, instead of £0 to £3,000, the rate of variability should be higher. If the independent commissioner considers the issue and says that the rate should change, it will be a matter for primary legislation—it will be a much more complex matter than simply lifting the cap.

Graham Allen: Will my right hon. Friend also concede that lifting the cap and introducing a different level of fee is wholly separate from that of who pays the fee? By 2010, 2015 or 2020, the system will not necessarily be the same as the one that we will have now, under which we will expect graduates to repay the whole fee charged by the university. There are many other ways forward, but that is a separate issue from the proper, real or market level for fees. In fact, that already exists, whether people like it or not, in the form of charges to international students and others.

Alan Johnson: My hon. Friend is right, but I will come to those points when I deal with the other amendments grouped with amendment No. 82.
 My hon. Friend intervened just as I was coming to his contribution on Tuesday. We dealt with a group of amendments about the need for universities to have a bursary scheme and to dedicate at least 10 per cent. of the relevant funds to it. Other amendments dealt with a national bursary scheme and with increasing the fee cap by RPI plus half of 1 per cent. I shall deal first with the amendments relating to bursaries. 
 I agreed with many of my hon. Friend's points. He was speaking from the heart about his experience in Nottingham, North, and many of us with similar constituencies would identify with that. I appreciated his point, but the amendments are unnecessary—[Interruption.] Perhaps someone is ringing to tell me that things have changed and that they are totally necessary. Let me spend a bit of time explaining why the approach that we intend to take makes the amendments unnecessary. 
 We floated the idea of a national bursary scheme in discussions. A formal proposal was never made, but the idea was reported in the press. In our discussions with the university sector, everyone, including the vice-chancellors, agreed that a fair chunk of the new money would go to student support in the form bursaries, grants, outreach activities—a point raised by the hon. Member for Ceredigion—the Aimhigher stuff and building aspirations. They all intend to use a large chunk of the money to meet the pay and conditions of those who work in universities and to deal with infrastructure problems, which have existed for many years. 
 I put it to those involved that we should make a necessity out of a virtue. My idea—I take the blame for it—was that it would be fairer if we set out in statute that 33 per cent. of the money should be put into a national bursary. In that way, universities with a larger proportion of youngsters from non-traditional backgrounds, to use the parlance, would not have to pay out more than other universities. Mea culpa—I was totally wrong, and the idea won the support of absolutely no one anywhere. Universities felt very deeply, and quite rightly, that the whole point of setting up a separate string of funding was to give them control over it so that no one could interfere with it. They thought that it went against the whole spirit of what we are trying to do for us to be prescriptive and to insist in legislation that a percentage of the new money should be siphoned off. 
 That said, we have been absolutely clear in the guidance to OFFA, which we have circulated to members of the Committee, that there will be a regulator. Universities UK and vice-chancellors accept that and, although I would not say that they were wildly happy about the regulator, they would rather deal on an individual basis. We said in the circulated draft letter from the Secretary of State to the director of OFFA—underlined, in block capitals—that we expect any poorer student on a £3,000 course with £2,700 provided by the state to have that £300 gap met. From our modelling, which no one in the sector has contradicted and with which they seem happy, that would not take any more than 10 per cent of the income coming through. 
 Of course universities like Cambridge, Exeter and Imperial—others are following suit apace—are saying that they will put in £4,000 a year as a bursary. We will come back to that later, but it equates to around 33 per cent of their income. The whole point is that we believe universities are genuine in wanting to help us with this widening participation agenda. They have been helping us for the last four years, with some good effect, incidentally. This should be a matter of trust, given the understanding that we want to have that £3,000 met if there is a £300 gap in the way that I described. In case anything goes wrong in future, there is a reserved power, under clause 31(4) of the Bill, that we could introduce such a requirement. I again counsel my hon. Friend the Member for Nottingham, North that, if we were to go down the route suggested in this group of amendments, we would totally lose the support of the university sector—all universities, right 
 across the spectrum. I say this having felt the hot air coming out of the oven after floating this idea a few months ago.

Chris Grayling: I listened carefully to the hon. Gentleman's comment about bursaries. Surely he must accept that the levels of bursary being talked about by universities like Exeter and Cambridge are select and small in number? His comments do not address the Wolverhampton question, about what happens to those universities that happen to have a much higher proportion of people who fall within the lowest third of income groups and which will have to find substantially higher levels of resource to provide the kind of compensation to those students that the Government are talking about.

Alan Johnson: That does not, but the letter to OFFA does. The letter to OFFA, the Secretary of State's statement on Second Reading and everything else make it absolutely clear that those universities that have a good social-class mix, such as Wolverhampton and Coventry, are not the problem. They would say that they do not have the same problem as universities that have a very small proportion of youngsters from working-class backgrounds. Everything makes it clear that we expect the regulator to pay more attention to those universities where there is not a good social-class mix than those where there is. The whole point about not going down the route of a prescribed 33Ž1?h -1pt/h -1pt?3? per cent, or even 10 per cent, is that universities that do not have a good record on social-class mix will be putting much more than 10 per cent into this. They will be doing that quite willingly, incidentally, in the sense that they agree that there is an issue. Anyone who reads the Russell group's literature, published last November, can see how intent those universities are at getting the best students from all backgrounds. There will not be any hostility there, although there certainly would be if we prescribed a certain amount as the amendments suggest.

Tim Boswell: Can we go back to the point about universities with a very high proportion of students from a non-traditional background? The Minister is suggesting through his guidance to OFFA that 10 per cent of fee income should be made available for bursaries as a minimum requirement. The rest would be discretionary. Institutions like the ones that I have indicated have a very low taxable fees base, but there is a very big requirement because there are probably a lot of students who come from very low-income families. Can the Minister assure the Committee that there will be enough money raised by every institution to meet the requirement the Government are setting for that institution?

Alan Johnson: We will speak more about that later, but the hon. Gentleman is wrong to say that we are saying that the universities have to provide 10 per cent. Our letter to OFFA says that there should be up to £300 to bridge the gap. We are not mentioning percentages.

Tim Boswell: Ten per cent. of the fee.

Alan Johnson: We must remember that if there is no £3,000 fee, there is no gap. If the fee is below £2,700, the student will receive more in grant than they have to pay in fees. The problem comes only when the fee is higher than £2,700. That was not always the case, because when the debate started last January, there was a £1,000 grant and a £850 gap, which was up to £3,000 when fee remission was included.

Tim Boswell: I am either puzzled or ignorant. Is the Minister saying that if fees of less than £2,700 are charged in an individual case, there will be no requirement to make any proportion available to the bursary scheme? To put it another way, will any fee income between £2,700 and £3,000 automatically be reserved for the bursary scheme?

Alan Johnson: Yes. The hon. Gentleman is right that there would be no obligation to provide the £300. As he will see from the letter, which we have tried to distribute so that people can get a feel for the system, if universities are charging anything more than £1,200—that is, if they need an access agreement—they will be obliged to put something into widening support. That support could be for disabled students, for example. All universities are keen to do that. They say that they will be able to use the extra money to do more to widen participation on different levels.

Graham Allen: One way that I use to understand an extremely complicated system is to use an example from my constituency. Would it be true to say that youngsters from families earning less than £15,900 will receive at least a full £2,700 grant and, if the fee levels are appropriate, a minimum £300 bursary and that, in addition, other specific institutions will give far more than the bursary? To help us explain that to our constituents, will the Minister undertake to write to the Committee to list the current universities—it could be four, 20 or 50—that have committed to provide an additional amount above the £2,700 and detail what they have committed? We will then be able to give our constituents the good news that their grant may in effect amount to £4,000, £6,000, £8,000 or even more in certain institutions.

Alan Johnson: I undertake to write with the latest position, as there have been some recent developments—I think that Surrey university announced something a couple of weeks ago.
 I want to make one final point on my hon. Friend's amendments. It is not a reason to reject them, but I was taken with his comment that he wanted the provisions in the Bill so that we could put it in front of students to clarify the issue. If we put the Bill in front of anyone, it is hardly likely to clarify the situation, but I understand his point.

James Clappison: What is the threshold for the requirement of the £300 bursary?

Alan Johnson: The threshold is the same as for the £2,700 maintenance grant—the income of £15,900. The threshold is for the poorest students and highest fee, which is the requirement set out in the letter to OFFA.

James Clappison: So is it right that for incomes above £15,970 there will not be a requirement for the bursaries that the Minister has described?

Alan Johnson: There will not be a bursary. There will be an element of grant and a requirement on the university to provide something, but it will not be the £300 bursary.
 The other interesting point is that Cambridge university's £4,000 bursary is available further up the income scale than our £2,700—up to a family income of about £36,000 or £37,000. I understand the hon. Gentleman's concern, but lots of universities are talking about working, and will be encouraged to work, not just inside the thresholds and tapers that we set centrally—although they will have to do that for the £300, as I explained—but beyond that to help the people who are just over the threshold, whom many hon. Members have mentioned.

David Rendel: Is the Minister aware of the remark that Professor Nicholas Barr made at a Social Market Foundation event the other day? Whether or not the 10 per cent. is set aside by the universities, as the Minister suggested, Professor Barr said that university funding will become more even between the more prestigious and less prestigious universities. As he put it, the Government will pass the fees that the elite universities introduce on to less prestigious universities. He went on to say that one could assume that that would happen if one assumed that Governments in the future would be sensible. In other words, he regards that as the only sensible way to behave. Does the Minister believe that that is how this Government will behave in future?

Alan Johnson: What Nick Barr described is exactly what is going to happen and what, in fact, I was just describing. Universities that do not have a good social and class mix will put much more of the extra fee income into widening participation, because they have a bigger problem to resolve. The concern, particularly of the modern universities, is that the system would work the other way round.

Tim Collins: In fairness to the hon. Member for Newbury, I do not think that that was his point. He was not talking about redistribution of income within the student population of one university, but a predication that money would be transferred from one class of universities, say, the Russell group, to other classes of universities. Does the Minister expect that to happen?

Alan Johnson: No, I do not expect that to happen, although, incidentally, it would happen under the proposal for a national bursary scheme to which I am speaking, which is why we oppose the amendment. The money that comes into the universities of Wolverhampton, Hull or Exeter should be distributed to the students of that university. Slices of that money should not be taken away and put into a national bursary scheme, because that would breach the principle, and be both bureaucratic and unpopular. Universities UK is against a national bursary scheme, which, I am pleased to say on record, we also oppose. Although I have enormous respect for Nick Barr, he is not a member of the Government. The number of
 people whom the hon. Member for Newbury bumps into at Oxford dinners is amazing.
 Amendments Nos. 252 and 144 are about the RPI plus 0.5 per cent., but, as hon. Members have pointed out, they state a minimum, not a maximum. Although they are wrong, I understand why my hon. Friend the Member for Nottingham, North tabled them. HEPPI—the higher education pay and prices index—is the higher education version of RPI, although it is more. However, we are not going down that route, because we think that RPI is sensible. In any case, I am sure that my hon. Friend would accept that setting a floor rather than a maximum would give future Governments a loophole to increase the figures, theoretically, by any amount.

Graham Allen: Actually, those amendments were a sneaky way of doing away with the cap entirely, but as I have been found out I shall be very pleased not to press them.

Alan Johnson: On to the meat and gravy—amendment No. 82, which, it has been said, is the controversial issue.
 My hon. Friend the Member for Cambridge deserves all the accolades that she has received in this debate and I shall add a few more. She has spoken on the issue with eloquence, intelligence and, at all times, a graciousness that does her credit. Incidentally, her argument is not designed to please the students in her constituency. The argument is not whether we should have fees or not have fees, which is something that people sometimes get confused about, but whether we should have a system in which universities are allowed to charge between £0 and £3,000 or whether each would have to charge £3,000, £4,000, £5,000 or any other amount for each student in each subject. That is the real debate. 
 There is no argument on the Government side of the House about how much money the universities need and how desperately they need it. My hon. Friend's argument coalesces around an important paper that my hon. Friends the Members for Southampton, Test (Dr. Whitehead) and for The Wrekin (Peter Bradley) produced, which argued cogently that, to raise the same amount of money, the fee needs to be set at £2,500, but for the purposes of this debate, it could be £3,000. The hon. Gentleman is not arguing to please an interest group in Cambridge, but it is still a difficult argument. 
 The argument among Labour Members is not whether fees should be charged, and I shall deal with that issue now, as it was raised earlier by the hon. Member for Harrogate and Knaresborough. Post-Dearing, Cubie, Rees, the Select Committee and the OECD report, things have moved on. The argument about whether students should make a contribution finished in 1998; the question now is how they should make that contribution. That has been the debate among Labour Members, which Opposition Members have joined in, perhaps for the first time. I do not think that we have had a debate in Parliament on that matter. 
 I say to my hon. Friend the Member for Leeds, East that Parliament would not have debated the matter if we had lost the vote on Second Reading. The point of getting the Bill into Committee is to consider it in detail and have a long debate on whether we should have a fixed fee. It is a controversial issue among Labour Members, but not in the country. The controversy there is about whether students should pay, and whether the fee should be £3,000. That is the debate, and it is very healthy—sometimes, depending on where one is. I am thinking of a meeting that I had at the London School of Economics. 
 We have heard on various occasions that the Bill would sail through if only the Government would say that every student would have to pay £3,000 on every course at every university. If we did so, every Labour Member would be with us, we would have a big majority and we could get rid of a lot of aggravation—my hon. Friend the Member for Cambridge finished her speech on the matter, although she did not use those words. However, people are suspicious. They ask why the Government are not doing that, because it would be so easy. They ask what is so important about the principle of variability. That is why we must spend some time, even at this late hour, going through the issues. 
 My hon. Friend the Member for Cambridge highlighted the main issue, which was the subject of her early-day motion 994 a year ago, which was very clear. It stated that 
''differential fees will deter students from low-income backgrounds from applying to the top academic institutions.''
 The debate has continued about the effect on universities in the future and so on, but the early-day motion highlighted the main issue. As she said—it is part of her unfailing graciousness—it is fair to say that the present student support level cannot still be the issue that concerns Labour Members. I accept that Opposition Members do not want fees anyway. 
 When the early-day motion was tabled, we proposed a £1,000 grant, and a £1,200 fee remission—that will be the figure in 2006—carried over from the present system, and there was an £800 funding gap. My right hon. Friend the Secretary of State said last March, well before I had my present job, that we would try very hard to see how we could bridge that gap. I understand the concern; we are moving from a fee matched by the support package to a situation in which that would be the case only for a fee of up to £2,200. 
 With the introduction of the education maintenance allowance, which is very important for all the good reasons cited by members of the Committee, widening of participation has not only to do with applications or admissions to universities, but goes right through the system. One of the big problems is the drop-out rate at 16: only Greece, Mexico and Turkey have a worse record in the OECD. From this summer, a 16-year-old from a poor background will receive £1,500 per year to stay on at school to obtain at least two A-levels or a level 3 qualification to go to university. So there will be an educational maintenance allowance of £3,000, a 
 grant of £8,100 over three years and a £11,100 non-repayable grant over a five-year period. Concentrating solely on university education, there is the £2,700 grant, if we mean the top academic institutions—that is a useful euphemism; I have heard others that are not so good—as well as a £4,000 bursary from at least three institutions, and a £3,555 loan. That totals £10,255 per year, plus an extra £1,000 for studying physics. 
 We can argue a lot about what such a package does—I shall do so later—but we cannot now seriously suggest that the terms of the early-day motion that attracted such support last April have not been met. Indeed, the hon. Member for Newbury made me think on Tuesday that perhaps we had not been as clear as we should have been, and I have written to him, because he requested that on Tuesday. I should tell him and the hon. Member for Harrogate and Knaresborough again that the grant replaces the loan. That is certainly the case in Wales, with the Assembly learner's grant. In Scotland, where the Liberal Democrats are in coalition Government, the grant replaces almost all the loan. There is only about £50 left. In Northern Ireland, the last legislation that the devolved Assembly passed before power returned to Westminster was to introduce a £1,000 bursary that entirely replaces the grant. That is not the case with our proposal. 
 One of the benefits of the long debate is that I was able to read Hansard. On Tuesday, the hon. Member for Newbury seemed to be under the impression that the grant is paid for three years and then added to the total that is repaid later. However, the whole £3,000 bursary is non-repayable. There will be some loan substitution, when the fee remission is rolled in: our best estimate is that it will be £855, and I do not expect it to be much different from that. However, because the loan will go up from 2006, that will leave £3,555. That is an incredibly important package, and whether it came from pressure from my hon. Friend the Member for Cambridge, or from anywhere else, we were always very keen to address the problem. We have addressed it, and I hope that I have dealt with the issue.

Chris Grayling: Surely the Minister must accept that if a student leaves university today with the average student loan debt of about £9,000, even with the full benefit of all the grants that he has described, the introduction of fees will mean that that student will still leave university with a debt of £9,000?

Alan Johnson: Yes, absolutely. Students from whatever background, studying a three-year, £3,000 course, will leave with that to repay. The argument was that that would not have been the case if we had retained fee remission, and we changed that. A perfectly good intellectual argument was made by Opposition Members and the Select Committee, as well as by my hon. Friends the Members for Southampton, Test and for The Wrekin. The argument concerned fee remission, which was fine and is needed when the fee is up front.
 However, the onus of the fee repayment will now be transferred from the family of the student applying to university to the earnings of the graduate when they 
 are in work and earning more than £15,000. The hon. Member for Hertsmere is shaking his head, but as my hon. Friend the Member for The Wrekin said, nobody can pay their supermarket bills with a fee remission. That is why we pushed it up front. If, for example, two 28-year-olds—one from a poor background and one from a more prosperous background—work together in the City, both earning £40,000 per year, why should one pay £9,000 in education fees and the other one less? They are in exactly the same situation. It is really important to understand the basis of the argument. 
 Under the income contingent repayment scheme, which the Inland Revenue will administer through payroll deductions, payments will go up when earnings go up, they will go down when payments go down and they will cease altogether when earnings drop below £15,000. That is a far better system than the mortgage-type repayment scheme presided over by the hon. Member for Daventry (Mr. Boswell). It had a higher threshold, and once people went over it by one penny, they had to pay everything back within five years. Ours is a much better system; indeed, it is just about the best system one could devise to hit all the buttons—more finance, expanding higher education and a fair deal for poorer students. 
Several hon. Members rose—

Alan Johnson: I will give way to my hon. Friend the Member for Cambridge

Anne Campbell: I am grateful to my right hon. Friend, who is making a powerful case, but is he saying that the debt that graduates acquire will not affect the choices that students make before going to university? We have had some debate about courses for which there will be a low fee or no fee at all in the supposition that that will attract extra students. I believe, as I think that my right hon. Friend does, that people's choices will be affected by the level of the fee, even though they will not pay it until after they graduate.

Alan Johnson: My hon. Friend is absolutely right. How can we argue that that is not a factor and then, as we have just done, debate paying medical students' fees to attract them on to courses? That is not the argument. We are arguing about the difference between a £3,000 fixed fee and a variable fee and for students to be charged less. If a university decides that it can charge less, why should it not do so? Why the rigidity? Why the communism of a rigid, fixed system—that is what Nick Barr and Iain Crawford were referring to—with no discretion to charge less? The point that my hon. Friend raises is an issue, but not in this debate, which is about fixed versus variable fees.

Tim Boswell: On the Minister's point about the threshold, and his criticism of the old, mortgage-type repayment scheme, which may, indeed, have had some faults, will he not concede a point that troubles my hon. Friend the Member for Hertsmere? The Minister proposes a repayment threshold of £15,000, but the threshold under the old scheme would now exceed £20,000.

Alan Johnson: Yes, I accept that, but I would like to ask a student which scheme they would choose. I
 would tell them that the threshold in one scheme would increase from £10,000 to £15,000 and that they would only pay 9 per cent. on their earnings above that level. I would tell them that there was a 25-year cap and that the scheme was income contingent so that when their earnings went up, their payments went up, and when their earnings went down, their payments went down. Then I would ask them whether they wanted a scheme in which they would have to pay the money back in equal amounts over five or seven years—there were two types of scheme—if they went a penny over the threshold, although the threshold may be higher, and graduates earn much more than they did when the hon. Member for Daventry was the Minister responsible for higher education. Finally, I would mention that no account would be taken of the fact that their earnings might go down afterwards and that they would still have to make the payments. I know which scheme they would choose, and knowing the hon. Gentleman as I do, I know which scheme he would choose if he were a Minister again.

David Rendel: If I understand correctly, the Minister said that the £2,700 grant would not be instead of a loan, and students would still be able to take on a loan for maintenance. Am I right in saying, therefore, that those who use the grant for maintenance, take on a loan—it can now be up to a maximum of £3,550 a year—and have to repay fees will have to pay back £9,000 in fees and £10,650 in maintenance loan? That would give them a total debt on graduation of £19,650. Is that not rather a lot for a graduate to have to pay back?

Alan Johnson: The hon. Gentleman's figures are spot on for someone taking the loan. However, there is a problem because the National Union of Students wants the loan to be higher, as do we. We do not want university students to have to go to credit card companies or banks, which charge a real rate of interest. We want them to take this soft loan, as would any future Government. I know that the Liberal Democrats have not won an election since 1918, but they are in power in Scotland in a coalition Government and they charge graduates a fee on an income-contingent basis once they have graduated. I do not understand the hon. Gentleman's argument. The higher we make the loan—we are pressed by the NUS to make a loan available—the more will people say that students have more debt. We could refuse to give students a loan and stand here and say that his figures are wrong, but students would be driven to accept loans from shysters at the street corner.

George Mudie: I do not want to cut across this technical argument. The Minister is putting a skilful case, but it is based on an early-day motion. It is not accurate to say that the only difference on this side of the Committee is between whether the fee is a fixed £3,000 or a variable fee involving the £3,000. The two elements put forward were not a personal view; they were a collective view held by a large number of hon. Members. If I have failed to get point that across or made the argument appear too personal, I have done the Committee a disservice. Some Labour members of the Committee are strongly opposed to variable fees,
 but the figure of £3,000 also seems excessive to many Labour Members.

Alan Johnson: I will move on to other parts of my hon. Friend's argument when I have a chance. However, the point is that the debate that we are having is on fixed versus variable fees. I set the figure at £3,000, and my hon. Friend the Member for Cambridge made the point that she would leave it to Ministers to set the level of the fee, but that it must be fixed. The figure of £2,500 has wide credence. Everyone who has argued with me, and who supports fixed fees, has said that the level should be £2,500. A perfectly reasonable argument for that has been made by my hon. Friends the Members for Southampton, Test and for The Wrekin. However, I do not accept the argument that a poor kid will be put off going to university by variable fees of up to £3,000. We are attacked over our manifesto, but I cannot see how charging all students a fixed fee of £2,500 would resolve any of the problems that the supporters of fixed fees tell me exist with variable fees.

Anne Campbell: That is not the argument. The argument is about whether that affects the student's choice of university. The point made in the early-day motion was that if the choice is between a university charging no fee and one charging £3,000, a debt-averse student from a low-income background is more likely to choose the cheaper university.

Alan Johnson: That is another part of the argument.
Several hon. Members rose—

Alan Johnson: I will take one more intervention and then I will make progress.

Graham Allen: Does my right hon. Friend accept that, either for party political reasons or simply through ignorance, there is an attempt to confuse the equivalent of credit card debt with income-contingent repayments? It is as much nonsense to say that someone will have a cloud over their head of allegedly £9,000—many will have far less than that, but let us use that figure—as it is to say that people will live in fear when they graduate because they face, on average, a £500,000 income tax debt for the foreseeable future. People do not think like that. People, especially those that have struggled to get an education, are well aware that the debt referred to by the Opposition is nothing like the income-contingent repayments, which they can easily take care of—paying about £4 a week once they are earning £18,000 a year. It is a deliberate confusion. I get annoyed about it because it puts ordinary kids off going to university. The sooner Opposition Members get used to that and stop using such language, the more their pontification about getting youngsters into university will come—

Roger Gale: Order. I call the Minister.

Alan Johnson: I agree with my hon. Friend. To be fair to them, the Opposition quoted the right figures. The student income and expenditure survey showed that average student debt is now £8,500 or £8,600. However, Claire Callender's analysis showed that 26 per cent. of them paid an average of £800 up front for
 the existing fee. The view that parents are paying the existing fee is wrong. It is onerous on students, which is why getting rid of up-front fees will be so beneficial.
 Finally, I shall say how we shall deal with poor students. My hon. Friend the Member for Cambridge spoke about the length of time that they have to repay and referred to 33 years. She will be aware of the 25-year cap. That is important because of the suggestion made by others that the onus will be on the student to go into a high-paid jobs rather than the public services. That is an understandable concern, but the increase in the threshold, the 9 per cent. repayment system and the 25-year cap will mean that those who spend their whole working lives on the equivalent of £17,000 will repay a grand total of £4,500 for their loan, their grant and their fees. The Government will write off £10,500, so it is an important safeguard.

Chris Grayling: Will the Minister give way?

Alan Johnson: No. I must make progress.
 My hon. Friend the Member for Nottingham, North raised an important point about how student choice will be affected. We do not believe that it will have an adverse effect, as it is not opening up a market but putting on a cap of between £0 and £3,000. The Select Committee said that if we were to go down that route—it was not recommended—it would be better to have a bigger gap. We think that it is the right balance; there is not a huge field. We do not think that it will affect students' choices. That is why the argument about opening a market in further education is spurious, although that sector is important. We have a market now in higher education for part-time students, overseas students and postgraduates. 
 Universities are good at ensuring that they do not set a limit that would prevent them from getting customers to study part time. Part-time students are a huge issue—I know that we shall debate the matter separately—but they pay unregulated up-front variable fees and always have done. There is no evidence that youngsters on part-time courses do not pursue the courses that they want. I shall look at the concerns in more detail later, but this is not a serious concern for us given the evidence, both from those in this country who operate in an unregulated market, and from those in New Zealand, Australia, Canada and other countries that have a similar variable fee system. My hon. Friends the Members for Aberavon (Dr. Francis) and for Bury, North dealt with that point carefully in interventions. 
 The other question is the effect on modern universities. My hon. Friend the Member for Cambridge argued her case eloquently. I am sorry that the hon. Member for Harrogate and Knaresborough is not with us. I understand the reasons and we all wish him well; I know that he will be back on Tuesday. The hon. Gentleman spoke of a letter published in The Guardian from modern university vice-chancellors. We can all quote letters, but they always seem to be to The Guardian. The five vice-chancellors were Peter Knight of the university of Central England; Geoffrey Copland of the university of Westminster; and the vice-chancellors of Sheffield Hallam university, of Liverpool John Moores 
 university and of the university of East Anglia—modern universities, with all the street cred that it implies. They said: 
''Universities must have the right to vary the fees charged to full-time students . . . It is ridiculous to pretend that every course in every institution should or could command the same price. Why should a university be forced to charge £3,000 if it believes that a fee of, say, £1,500 is appropriate?''
 They then give some examples. 
 If one were looking for a philanthropist in that area, there is no one better than Sir Peter Lampl of the Sutton Trust, who has dedicated his whole life to the issue of kids from poor backgrounds going to university. He is a well known businessman, and the Sutton Trust is highly respected. He says: 
''We strongly believe that the variable fee is the only sensible and equitable option for university funding. There are different costs and benefits associated with different degree courses at different institutions and the fee structure must be able to reflect this.''
 That is our simple argument on this point. We are not trying to make life difficult for ourselves. We are saying that one can just about get away with a fixed, rigid fee when it is down at £1,000. 
 I understand why my right hon. Friend the Home Secretary did not do what we are now doing, which is carrying out the Dearing recommendations. He took another route because the economy at that time meant that we did not have the finances to pay fees up front and wait years to get the money back. We had to have up-front fees, which meant that £1,000 was about the most that we could get away with charging. That was made rigid: universities could not charge more or less. We think that £3,000 is the right amount to charge, for all the reasons that my hon. Friends the Members for Southampton, Test and for The Wrekin have given. I think that my hon. Friend the Member for Cambridge agrees, because we need that money to go to universities in addition to the £3 billion from the taxpayer. Our argument is simply this: why must we insist? It is top down. The amount is £3,000, but universities can charge less, and there are various ways in which that can be done. My hon. Friend the Member for Bury, North eloquently explained that universities could do that through discounts, perhaps by offering £1,000 off here and there to fill courses; they will need to do that. 
 With a fixed, rigid system, universities will have to abandon courses if they cannot attract students on to them. Our argument, which was also expressed by Bob Boucher, the vice-chancellor of the university of Sheffield, at a meeting in the House, is that we should not force universities covertly to pretend that we have a fixed system when, in reality, we have a variable-fee system—with all the bureaucracy that that would entail—when we could simply agree to have a variable-fee system. If all vice-chancellors at all universities decide that we should have a fixed fee on all courses, which my hon. Friend the Member for Cambridge expects would end up being £3,000, that is fine, but we should give them the choice. Why should we insist on welding a rigid, fixed £3,000 fee on to that diverse sector? That is the only reason why we argue for variability, and that is why we say that there 
 should be a fee of £3,000, but that universities should be allowed to charge less. 
 There is no hidden agenda to set the fee at £3,000, but quickly move to something else. Variability is an important principle simply because students should be able to choose between courses at the rates that the universities want to charge, and not with us insisting that they should all charge the top rate.

Jonathan R Shaw: After speaking to many vice-chancellors, did not the Secretary of State tell the Select Committee that vice-chancellors expected there to be a lower-rate fee for the foundation degrees that we are all keen to see, not least to widen participation in vocational qualifications?

Alan Johnson: That is an important point, which is also relevant to the argument that took place on Tuesday about vocational degrees. A large part of our expansion will be in foundation degrees, which are two-year vocational sub-degrees. Again, that is in accordance with the Dearing recommendations. With fixed fees, universities would have to charge £3,000 for those courses; otherwise one is arguing for variable fees. If one wants to introduce a system of discounts, one is arguing for variable fees.

Mark Francois: The Minister says that there is no hidden agenda, and argues that the Government want variable fees in order to allow some institutions to charge less. I do not cast any aspersions on his personal honour, but the real heart of this is that the Government have already fundamentally broken their word twice—over the introduction of tuition fees and now over top-up fees. [Hon. Members: ''No.''] All the Labour Members who are mumbling know that they have. When the Minister says that there is no hidden agenda, no one believes him, and that is why he and his Government are in the mess that they are. They can give all the guarantees they want; the problem is that no one believes those guarantees because they have become worthless.

Alan Johnson: I will ignore that intervention. I will come to the issue of manifesto commitments in due course; the Committee should not worry about that. However, let us keep this constructive and important debate centred on the contribution of my hon. Friend the Member for Cambridge, which had far more quality than that intervention.
 The Dearing report recommended that the Quality Assurance Agency for Higher Education be set up and it has been. My hon. Friend was concerned that quality will be driven down. The QAA has made great strides and has become extremely important in the short time that it has been around; it is absolutely inconceivable that it would allow quality standards to slip. Its job is to ensure that does not happen, irrespective of levels of fees charged, and I expect it to continue to do that as well as it has. 
 Another argument that many vice-chancellors of modern universities have made is that they are successful at attracting international students in areas where there is a market. Middlesex university, for 
 instance, has the second highest number of overseas students. Let us consider what universities such as De Montfort in Leicester do when it comes to law. They can compete, but many resent the idea that they cannot. Others have concerns about the effect of the measure. However, their having to command a higher price because they could not justify that price by choice of students is the wrong way for us to go. 
 The right way is to look at how the measure works in the early years of its implementation. My hon. Friends the Members for Cambridge and for Leeds, East and other Members can rest assured, because we will have an independent commission three years after the introduction of variable fees. The Committee has seen the terms of reference. 
 Incidentally, my hon. Friend the Member for Leeds, East made an important point about linking student support to the fee. The terms of reference published by my right hon. Friend the Secretary of State state that the commission will have to consider: 
''Student support arrangements, including those for those from the poorest backgrounds as well as those above the threshold for government support.''
 It will also have to consider: 
''What changes should be made to the arrangements for student support in order to ensure that students from the poorest family backgrounds on the most expensive courses receive support at a level equivalent to the maximum level of fees.''
 My hon. Friend the Member for Leeds, East raised an important point about how we will continue to keep those two in train. As well as looking principally at whether variable fees have had the effect that my hon. Friend fears—as do many others on our Benches and also a minority of vice-chancellors—the independent commission will enable us to consider matters at an early enough stage to change tack if we need to.

Tim Collins: I am grateful to the Minister. He is answering the debate well. He is also answering comments made by the hon. Member for Leeds, East, who referred to discussions involving the Prime Minister about a more wide-ranging commission that would look at higher education funding. Are there any circumstances in which that idea of a wider-ranging commission might re-surface?

Alan Johnson: I believe that there must be such circumstances. The hon. Gentleman will have to forgive me; I am not totally privy to the discussions that my hon. Friend the Member for Leeds, East mentioned. [Interruption.] That is interesting, but true. I think that that might lead on to other things.
 The contribution made this morning by the hon. Member for Harrogate and Knaresborough was very powerful, as usual. He argued powerfully on Second Reading. The Liberal Democrats have taken a principled stance—they have taken it since they were last in Government in 1918, when there were 13 universities. They believed then that they should be free and they still believe it now, many years later. They have been consistent on that issue. However—[Interruption.] That is not the debate; the debate is about variable versus fixed fees. I understand the 
 hippy commune in which the Liberal Democrats sometimes live, but I was surprised to see a letter to the Financial Times on 23 December, in which the Liberal Democrat Treasury spokesman, the hon. Member for Twickenham (Dr. Cable), criticised an article by Professor Giddens. He wrote: 
''Where Professor Giddens . . . is absolutely right is in his criticism of flat-rate fees. This is the worst of all worlds: a poll tax on students totally unrelated to the quality of higher education provided or the preferences of students.''
 That is amazing. I say with great affection to the hon. Members for Newbury and for Harrogate and Knaresborough that they cannot get round this principled stand of theirs. I mentioned it on Second Reading, and we should keep repeating it. Scotland is the one part of the UK in which they are in government. In Scotland, graduates make a contribution. They cannot get round that. I read the argument in his leader article that they contribute to the grant in Scotland, but that the teaching is free. Here, they contribute to the teaching, and the grant is free. I do not understand this issue of principle for which the Liberal Democrats would go to the wall. 
 Finally, we are hit two ways on the funding gap. First, we are told that flat-rate fees do not raise enough money and are not worth all the trouble because the funding gap is so wide.

David Rendel: Will the Minister give way?

Alan Johnson: No, the hon. Gentleman has had time to think about this. I will come back to him.
 We are told that the funding gap is too wide, so this is a drop in the ocean. We are then criticised the other way. I quite liked what my hon. Friend the Member for Leeds, East said, perhaps uniquely, about the funding: that we have been so generous to universities, why do they want more, and why do we need to jump to £3,000? I am not surprised that my hon. Friend has seen different figures on the funding gap. 
 Assessments of the funding gap differ. I mistakenly said that Dearing had made an assessment; he did not. The assessment that we have used, which I believe the universities also use, was made by JM Consulting on behalf of HEFCE in 2002. Its figures are not too different from the other figures that have been bandied around. It says that there is a £7.8 billion funding gap, which is often talked about as an £8 billion funding gap, of which £3.2 billion is in research. That is a cumulative figure, not an annual one. 
 As a result of the spending review and the enormous increase in the amount of money that we put into research, HEFCE now says that the backlog in research will be cleared by 2008. That means that £3.2 billion will be taken off the figure of £7.8 billion, which leaves £4.6 billion. This measure, together with the £800 million currently coming from fees, will produce around £1.8 billion a year. By 2010, if we are successful in expanding higher education as we propose, that figure will be worth £2.5 billion because more students will be paying fees. That leaves a gap of £2.1 billion, which is part infrastructure, part capital and part revenue. We have taken enormous strides to close that gap. I do not think that anyone believed it would be closed in 
 one year, two years, four years or five years. Certainly, the Dearing report mentioned that we should recognise that part of its terms of reference was to examine the financial situation. Dearing would not have imagined that we could get this far. 
 Lord Dearing will have his own say in another place when the Bill is considered there. However, someone mentioned, quite justifiably, that Dearing did not recommend variability.

Tim Collins: Will the Minister give way?

Alan Johnson: Not just yet.
 Dearing has spoken about variability, however. He pointed out to me that his report mentioned variability. He said he did not rule it out, and that the Government may need to consider it, but he attached several conditions. In The Guardian on, I believe, 4 January, he wrote very elegantly about his belief that our proposals were right. He believed that the fee cap of £3,000 was right, but that there should be very serious safeguards against that fee cap being increased, if it had to be increased at all. He suggested that it might never have to be increased. I think that when the Bill is debated in the Lords, Lord Dearing will not only point out that he mentioned variability and did not rule it out, but will say—if he is still of the same mind as when he wrote the article for The Guardian in January—that the proposals are acceptable to him.

Tim Collins: The Minister will be entitled to say in response to what I am about to say that Universities UK supports the Bill, which is perfectly true. However, I am sure he will be familiar with the speech made by Professor Crewe, in which he points out that the request from Universities UK for the previous spending review was £9.94 billion. He says that Universities UK welcomes the £3.7 billion that the Government provided, but goes on to say that for the next spending review, even after that £3.7 billion, it will still put in a request for a further £8.79 billion for England. Professor Crewe says—he takes four pages to explain it—that £8 billion minus £3.7 billion does not equal a request for £8.79 billion, but that none the less that is what they are asking for. The Minister therefore cannot deduct the £3.79 billion from the £8 billion or £9 billion.

Alan Johnson: The Minister most certainly can. The hon. Gentleman makes a fair point that other people have also made. There is a difference between Universities UK's bid in the spending review, going back to the point made by my hon. Friend the Member for Leeds, East about our trade union days—[Interruption.] I am secretary of its fan club, but there is a difference between the bid that Universities UK makes for the spending review and the funding gap independently identified by JM Consulting on behalf of HEFC, which is not too different from the figures that have been produced elsewhere.
 In relation to the point that that would give just £1 billion to universities, we were told in contributions by the hon. Members for Westmorland and Lonsdale and for Harrogate and Knaresborough that we should just hand that money to the universities. However, the figures do not support that. The main cost is fee 
 deferral for the current £1,000, and fee deferral for anything above that in relation to variable fees. That comes to around £600 million, and £1.8 billion will come in from these measures. 
 Another view is that all the money that we are spending in grants and in increasing the threshold should be taken into account. I was surprised that that point was made by the hon. Member for Harrogate and Knaresborough because that would mean there would be no grants, no bursaries, no abolition of up-front fees, no independent source of revenue for universities, and no 25-year cut-off. We should, in any case, be dealing with those issues as a matter of public policy, whatever the issue about fees. The hon. Member for Westmorland and Lonsdale made a genuine point, about the cost of deferred fees. That amount will be far lower than the money that universities will get back in total fees.

Chris Grayling: The Minister is saying that the measures will create an additional £1.8 billion, but that is not correct. According to his own figures, the measures will generate about £900 million, of which approximately £600 million will go on fee remissions, and the additional package of grants and student support, which, as Opposition Members have been arguing, compensates students only for the introduction of fees, will take the cost to well over that £900 million.

Alan Johnson: No, I did not get the figures wrong. The hon. Gentleman is under a misapprehension, as he was with the question of radiographers. The argument made by the hon. Member for Westmorland and Lonsdale was that the money coming to universities from fees should be given to them, because it is exceeded by the total cost of the package. The money that the universities receive from fees is £800 million now, and £1 billion from the increased fees—that is, £1.8 billion. The Opposition, in a situation in which the universities want more money, want to take that money out and not put anything back, whereas at least the Liberal Democrats say how they would put the money back.

George Mudie: I just said quietly to a colleague that I can see why the Post Office lost a lot of money in negotiations with the Minister.
 I should like to press the Minister on the figure of £800 million for the present income. The present income for £1,120 is always, in all publications, put at £400 million to £450 million. I asked when I raised the figures if they were net. Is the Minister standing by the figure of £800 million as the income?

Alan Johnson: Yes, my hon. Friend is right. The figure of £400 million to £500 million is the actual money, net of fee remission, but we pay the fee remission to the universities. The universities receive £800 million, but the students are paying about £400 million to £500 million. The rest is fee remission. It is an important point. My hon. Friend talked about a number of concessions reducing the amount of money going to the universities, a point made by the Opposition. Not one penny has been reduced in relation to the money going to the
 universities. We give the money to the universities up front. We were paying for the fee remission—when it was fee remission, the university got the full fee and we paid for the fee remission for the poorer students—we will pay for the grants, we will pay for the higher threshold. Universities will receive exactly the sum that they were projected to receive when the White Paper was published in January, now that we have gone through the carious phases with the better student support package.

Tim Collins: The Minister is being genuinely helpful and is elucidating the situation. He will recall that there was a significant exchange at Education and Skills questions a couple of months ago between the Secretary of State and my hon. Friend the Member for South Suffolk (Mr. Yeo), in which my hon. Friend asked the Secretary of State whether all the concessions that had recently been announced would be met from the existing higher education budget. The Secretary of State said yes. The Minister of State appears to be saying no. Which is true?

Alan Johnson: When I say that we are paying for that I mean that the Government are paying for it. I think I explained how that broke down in some detail on Second Reading, in response to an intervention from the hon. Member for South Suffolk. The new arrangements announced on 8 January—the 25-year cap, the expanded loan, and the extra £500 on the grant—would be paid within the existing DFES budget. The rest of the package was coming from Her Majesty's Treasury.
 I understand the importance of this group of amendments. I hope that they will be either withdrawn or defeated, although I understand that this is an important point for my hon. Friend the Member for Cambridge and that she will want to press it to a vote. However, I must say that the solution to the problem may be many things, but it is not a fixed, rigid fee. We have debated the issue at length and I hope that hon. Members will reject the amendments.

Anne Campbell: It seems a long time ago that I moved my amendments. I think it has been an excellent debate. There have been some very good contributions from all sides of the Committee. I feel that I now understand the issues much better than I did before, and I hope that everyone else feels the same way.
 I wanted to take the opportunity to accept the apology made by the hon. Member for Harrogate and Knaresborough, but he is no longer in his place, and I understand why. Obviously things became a little heated on Tuesday, when we were arguing about this, so I want to acknowledge and accept the apology. 
 I begin by reiterating the point I made in an intervention on my hon. Friend the Member for Bury, North about the nature of the market. We did hear some contributions about the market system and its nature. Many people were saying that there is a market at the moment, and all we are doing by introducing a variable fee is enhancing the market. However, there is a big difference. At the moment, the market is about 
 A-level grades. That is the currency used. It is used by the student to try to negotiate the best possible place, and it is used by the university when deciding whether to accept students. It is far from being a perfect market. It is imperfect for many reasons, one of which—and it is one of the most frustrating from my point of view—is the ignorance of the system by the student. 
 One of the reasons that Cambridge, probably Oxford and many of the other Russell Group universities do not get their full quota of low-income students is that those students do not understand that there is a generous system of bursary support at many of the elite universities, which can be just as welcoming and as appropriate for students from lower-income backgrounds as for those from middle-class backgrounds. It is terribly important that we watch our language when we are talking about this, because I have picked up the Liberal Democrats on several occasions for making remarks that add to the perception that the elite universities are not for lower-income students.

James Purnell: Is the market not more complicated than that, what with A-level grades, the cost of the area around the university, the attraction of that university and the quality of its student union? I know my hon. Friend is not saying that the market is purely about the cost of the fee, but if it were, and the amendment were be accepted, the consequences of these new arrangements would be that people stopped applying to Wolverhampton and there would be a surplus of applications to Cambridge. The very fact that that is absurd shows that the market is much more complicated. People going to university, particularly to Russell group universities, are going to be able to weigh up these arguments, understand the grants and therefore make a well-informed decision.

Anne Campbell: What I want to achieve by this amendment is a system very similar to the one we have at the moment. I accept that universities need more money, although I have had a little disagreement with my hon. Friend the Member for Leeds, East about the level of the fee. When I first tabled the early-day motion in April last year, my understanding was that a fee of around £2,000 would probably produce about the same income in total for universities as a variable fee of up to £3,000. The Higher Education Policy Institute published a paper in September which suggested the level would have to be about £2,500, and I accept that. That finding was later confirmed by the excellent paper by my hon. Friends the Members for Southampton, Test and for The Wrekin.
 I regard the fixed fee as a passport into higher education, payable after the student graduates rather than upfront, so that the student can choose the university that best suits their aptitudes and abilities and offers the course that they want to study. No thought needs to be given to cost or debt.

David Chaytor: Now that my hon. Friend is quite clear that she will accept £2,500 as a fixed rate fee, can she explain to the Committee how she can possibly justify the fact that someone who goes to Cambridge to do a degree in law, or maths and economics, should
 pay exactly the same course fee as someone who does a two-year foundation degree at a local modern university, given the enormous—and, in some cases, stratospheric—differences in earnings potential and career opportunities?
 As my hon. Friend said she wants something similar to the existing system, can she also tell us what there is in the system that has positively worked to enhance increased participation by working-class students at any time in the last 50 years?

Anne Campbell: Let me start by saying that the fixed fee—the passport into higher education—payable by students who attend Cambridge university or who perhaps do a foundation course, is justified because it is not necessarily related to the amount of money that people earn afterwards. It is perfectly possible for somebody to attend Cambridge university and end up doing a job in the public services which may be quite low paid, so they might never earn more than £18,000 to £20,000 a year. It is also perfectly possible for someone to do a foundation degree and become a plumber, for example. I know from experience that plumbers in London are paid a great deal of money. They can earn a great deal because of the shortage in that subject area. I have no problems with that: it is fair that someone doing a job that they love doing and are doing for the benefit of the community should be low paid and that an occupation that is desperately needed and in short supply should be paid well.
Mr. Chaytor rose—
Mr. Rendel rose—

Anne Campbell: I would like to make some further progress. I promised my hon. Friends that I would not take more than 10 minutes and I know that everyone is dying to get away—[Interruption.] My hon. Friend the Member for Halton (Derek Twigg) is looking at me and I would like to win some favour.
 There is a point that I should have raised before that I want to raise now, which was made to me by students at Anglia polytechnic university who are worried about the value of their degrees. If a university is known to charge less for its degree courses than another university, it becomes obvious that the university is having difficulty in attracting students, and people attending it are worried that their degree will be devalued. Not only will they have to say to a future employer—[Interruption.]

Roger Gale: Order. I have said this before to the Committee. The hon. Lady is gently spoken and the Chairman wishes to hear her. I have the option to suspend the Committee for 15 minutes.

Anne Campbell: Thank you, Mr. Gale. I shall try to speak louder. I think I am not near enough to a microphone; perhaps if I move I shall be.
 If a future employer wants to know what sort of degree a person has, are they going to ask that graduate how much they paid for their degree as well as what degree classification they have? That is a genuine worry among students, which cannot be ignored. 
 When I made my introductory remarks, several of my hon. Friends intervened about the variable fees 
 and part-time students. The hon. Member for Westmorland and Lonsdale said that he had not found my arguments convincing. I have since carried out some further work and it appears that there is currently little variability in part-time fees. I know that there is no statutory cap, but part-time fees tend to be related closely to the corresponding full-time fees, so that if a student is studying half-time, the payment will be roughly half of the current fixed fee. There is little variability. The problem, of course, is that if there is a variable fee for a full-time course, there is likely to be a variable fee in future for a part-time course. The fact that there is little variability in the fees for part-time courses at the moment does not mean that that would continue if the full-time fee became variable as well. 
 There are many points I could pick up, but I do not want to continue for too long. However, I want to touch on a point made by the hon. Member for Newbury about the cost of university for a student on a very low income, from a family background where there is less than £15,000 a year. I listened carefully to his arguments and I agree that at the moment that student would probably have a debt of around £15,000 on leaving university. Under the new system, the amount would be exactly the same. 
 However, under the Government's debt repayment proposals, that student will be far better off than under the current system. Under the proposed system, the student will repay £8.65 a week on a salary of £20,000 a year. Under the current system, the student will repay two lots of loans. They will repay the loan from the Government and a commercial loan. With the Government loan, they will repay £17.31 a week on a salary of £20,000, but they will also have a very high commercial loan, which presumably they will repay at a much greater interest rate. Although the debt will be the same after three years—I have always praised the Government's excellent student support system—a student will be far better off under the proposed system than under the current system. 
 It is very difficult, but I have some sympathy with the Liberal Democrats—[Interruption.] It is very difficult for me to sympathise with the Liberal Democrats, but I have some sympathy, in that, in opposing the plans, they often use arguments that are off-putting to students who are potential applicants to universities. I say that having had an argument with the hon. Member for Harrogate and Knaresborough about the supposed £50,000 for medical courses at Cambridge. The hon. Member for Newbury also told the story of his dinner with the master of a college wanting to charge £15,000 to £16,000 a year. 
 Those remarks are hugely damaging. There is already a perception outside the House that Oxford and Cambridge are very expensive universities, and those remarks can only make that perception much worse. I spend all my time telling people that Oxford and Cambridge are not expensive universities. Certainly to my knowledge, Cambridge is not an expensive university. Very generous bursary schemes are now available. It is important that all responsible members of the Committee tell students that that is the case and encourage them as much as possible to apply. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 4, Noes 13.

Question accordingly negatived.

Roger Gale: It may be for the convenience of the Committee to be aware that the Programming Sub-Committee will sit at 6 o'clock on Monday in a Room yet to be determined and that it is likely that we shall sit later on Tuesday than the sittings motion currently states. I have indicated to the usual channels that I shall be prepared to sit obviously from 2.30 pm until 5 o'clock and, if necessary, from 6 pm until 8.30 pm and from 9 o'clock onwards.
 Further consideration adjourned.—[Derek Twigg.] 
 Adjourned accordingly at twenty minutes past Six o'clock till Tuesday 2 March at ten minutes past Nine o'clock.